10-Q 1 dp37971_10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2013

Commission File Number: 0-29630

SHIRE PLC

(Exact name of registrant as specified in its charter)

Jersey (Channel Islands) (State or other jurisdiction of incorporation or organization)	98-0601486 (I.R.S. Employer Identification No.)
5 Riverwalk, Citywest Business Campus, Dublin 24, Republic of Ireland (Address of principal executive offices and zip code)	+353 1 429 7700 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232,405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer [X]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As at April 29, 2013 the number of outstanding ordinary shares of the Registrant was 562,826,237.

THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire’s results could be materially adversely affected. The risks and uncertainties include, but are not limited to, that:

Shire’s products may not be a commercial success;

revenues from ADDERALL XR are subject to generic erosion;

the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues and earnings;

Shire relies on a single source for manufacture of certain of its products and a disruption to the supply chain for those products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis;

Shire uses third party manufacturers to manufacture many of its products and is reliant upon third party contractors for certain goods and services, and any inability of these third party manufacturers to manufacture products, or any failure of these third party contractors to provide these goods and services, in each case in accordance with its respective contractual obligations, could adversely affect Shire’s ability to manage its manufacturing processes or to operate its business;

the development, approval and manufacturing of Shire’s products is subject to extensive oversight by various regulatory agencies and regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;

the actions of certain customers could affect Shire's ability to sell or market products profitably and fluctuations in buying or distribution patterns by such customers could adversely impact Shire’s revenues, financial conditions or results of operations;

investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines;

adverse outcomes in legal matters and other disputes, including Shire’s ability to obtain, maintain, enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire’s revenues, financial condition or results of operations;

and other risks and uncertainties detailed from time to time in Shire’s filings with the Securities and Exchange Commission, including those risks outlined in “Item 1A: Risk Factors” in Shire’s Annual Report on Form 10-K for the year ended December 31, 2012.

The following are trademarks either owned or licensed by Shire plc or its subsidiaries, which are the subject of trademark registrations in certain territories, or which are owned by third parties as indicated and referred to in this Form 10-Q:

ADDERALL XR® (mixed salts of a single entity amphetamine)

DAYTRANA® (trademark of Noven Pharmaceutical Inc.)

DERMAGRAFT® (human fibroblast-derived dermal substitute)

ELAPRASE® (idursulfase)

ELVANSE® (lisdexamfetamine dimesylate)

EQUASYM® (methylphenidate hydrochloride)

EQUASYM XL® (methylphenidate hydrochloride)

FIRAZYR® (icatibant)

FOSRENOL® (lanthanum carbonate)

INTUNIV® (guanfacine extended release)

LIALDA® (trademark of Nogra Pharma Limited (“Nogra”))

MEZAVANT® (trademark of Nogra)

PENTASA® (trademark of Ferring B.V. Corp (“Ferring”))

PREMIPLEX® (IGF-I/IGFBP-3)

REPLAGAL® (agalsidase alfa)

RESOLOR® (prucalopride)

VASCUGEL® (allogeneic aortic endothelial cells cultured in a porcine gelatin matrix [Gelfoam®] with cytokines, implanted)

VENVANSE® (lisdexamfetamine dimesylate)

VPRIV® (velaglucerase alfa)

VYVANSE® (lisdexamfetamine dimesylate)

XAGRID® (anagrelide hydrochloride)

ZEFFIX® (trademark of GlaxoSmithKline (“GSK”))

3TC® (trademark of GSK)

SHIRE PLC

Form 10-Q for the three months to March 31, 2013

Table of contents

	Page
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited Consolidated Balance Sheets at March 31, 2013 and December 31, 2012	5
Unaudited Consolidated Statements of Income for the three months to March 31, 2013 and March 31, 2012	7
Unaudited Consolidated Statements of Comprehensive Income for the three months to March 31, 2013 and March 31, 2012	8
Unaudited Consolidated Statement of Changes in Equity for the three months to March 31, 2013	9
Unaudited Consolidated Statements of Cash Flows for the three months to March 31, 2013 and March 31, 2012	10
Notes to the Unaudited Consolidated Financial Statements	12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	47
ITEM 4. CONTROLS AND PROCEDURES	47

PART II OTHER INFORMATION	47
ITEM 1. LEGAL PROCEEDINGS	47
ITEM 1A. RISK FACTORS	47
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	47
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	47
ITEM 4. MINE SAFETY DISCLOSURES	47
ITEM 5. OTHER INFORMATION	48
ITEM 6. EXHIBITS	48

PART I: FINANCIAL INFORMATION

ITEM1: FINANCIAL STATEMENTS

SHIRE PLC

UNAUDITED CONSOLIDATED BALANCE SHEETS

		March 31,		December 31,
		2013		2012
	Notes		$’M		$’M
ASSETS
Current assets:
Cash and cash equivalents			1,450.7		1,482.2
Restricted cash			19.3		17.1
Accounts receivable, net	4		884.4		824.2
Inventories	5		471.4		436.9
Deferred tax asset			224.3		229.9
Prepaid expenses and other current assets	6		283.2		221.8
Total current assets			3,333.3		3,212.1

Non-current assets:
Investments			39.3		38.7
Property, plant and equipment, net			951.0		955.8
Goodwill	7		522.8		644.5
Other intangible assets, net	8		2,657.2		2,388.1
Deferred tax asset			47.3		46.5
Other non-current assets			34.7		31.5
Total assets			7,585.6		7,317.2
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	9		1,477.2		1,501.5
Other current liabilities	10		142.5		144.1
Total current liabilities			1,619.7		1,645.6

Non-current liabilities:
Convertible bonds			1,100.0		1,100.0
Deferred tax liability			607.3		520.8
Other non-current liabilities	11		476.5		241.6
Total liabilities			3,803.5		3,508.0
Commitments and contingencies	12		-		-

SHIRE PLC

UNAUDITED CONSOLIDATED BALANCE SHEETS (continued)


		March 31,			December 31,
		2013			2012
	Notes		$’M			$’M

Equity:
Common stock of 5p par value; 1,000 million shares authorized; and 562.8 million shares issued and outstanding (2012: 1,000 million shares authorized; and 562.5 million shares issued and outstanding)			55.7			55.7
Additional paid-in capital			3,002.1			2,981.5
Treasury stock: 11.3 million shares (2012: 10.7 million shares)			(341.6	)		(310.4	)
Accumulated other comprehensive income	13		49.1			86.9
Retained earnings			1,016.8			995.5
Total equity			3,782.1			3,809.2
Total liabilities and equity			7,585.6			7,317.2

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PLC

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

3 months to March 31,		2013			2012
	Notes		$’M			$’M
Revenues:
Product sales			1,116.7			1,106.9
Royalties			38.5			56.3
Other revenues			6.7			8.6
Total revenues			1,161.9			1,171.8

Costs and expenses:
Cost of product sales(1)			155.9			158.4
Research and development(1)			224.2			220.3
Selling, general and administrative ("SG&A")(1)			438.7			500.0
Goodwill impairment charge	7		198.9			-
Gain on sale of product rights			(6.5	)		(7.2	)
Reorganization costs	3		17.5			-
Integration and acquisition costs			4.1			5.3
Total operating expenses			1,032.8			876.8

Operating income			129.1			295.0

Interest income			0.7			0.8
Interest expense			(9.1	)		(10.2	)
Other (expense)/ income, net			(1.1	)		1.9
Total other expense, net			(9.5	)		(7.5	)
Income before income taxes and equity in earnings of equity method investees			119.6			287.5
Income taxes			(55.2	)		(50.0	)
Equity in earnings of equity method investees, net of taxes			0.4			0.9
Net income			64.8			238.4

Earnings per ordinary share - basic	11.7	c	43.1	c

Earnings per ordinary share - diluted	11.7	c	41.4	c

Weighted average number of shares (millions):
Basic	551.5		553.5
Diluted	555.3		595.6

(1)

Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $nil for the three months to March 31, 2013 (2012: $0.2 million). SG&A costs includes amortization of intangible assets relating to intellectual property rights acquired of $45.9 million for the three months to March 31, 2013 (2012: $45.6 million).

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PLC

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

3 months to March 31,	2013			2012
	$'M			$'M

Net income		64.8			238.4
Other comprehensive income:
Foreign currency translation adjustments		(36.1	)		36.6
Unrealized holding gain/(loss) on available-for-sale securities (net of taxes of $0.2 million and $nil)		(1.7	)		2.9
Comprehensive income		27.0			277.9

The components of accumulated other comprehensive income as at March 31, 2013 and December 31, 2012 are as follows:

	March 31,		December 31,
	2013		2012
		$’M		$’M
Foreign currency translation adjustments		49.0		85.1
Unrealized holding gain/(loss) on available-for-sale securities, net of taxes		0.1		1.8
Accumulated other comprehensive income		49.1		86.9

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PLC

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In millions of US dollars except share data)

	Shire plc shareholders' equity
	Common stock $'M		Common stock Number of shares M's		Additional paid-in capital $’M		Treasury stock $'M			Accumulated other comprehensive income $'M			Retained earnings $'M			Total equity $'M
As at January 1, 2013		55.7		562.5		2,981.5		(310.4	)		86.9			995.5			3,809.2
Net income		-		-		-		-			-			64.8			64.8
Foreign currency translation		-		-		-		-			(36.1	)		-			(36.1	)
Options exercised		-		0.3		-		-			-			-			-
Share-based compensation		-		-		16.6		-			-			-			16.6
Tax benefit associated with exercise of stock options		-		-		4.0		-			-			-			4.0
Shares purchased under share buy-back program		-		-		-		(75.0	)		-			-			(75.0	)
Shares released by employee benefit trust (“EBT”) to satisfy exercise of stock options		-		-		-		43.8			-			(43.5	)		0.3
Unrealized holding gain on available-for-sale securities, net of taxes		-		-		-		-			(1.7	)		-			(1.7	)
As at March 31, 2013		55.7		562.8		3,002.1		(341.6	)		49.1			1,016.8			3,782.1

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PLC

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

3 months to March 31,	2013			2012
		$’M			$’M
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		64.8			238.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		75.0			73.0
Share based compensation		16.6			22.0
Goodwill impairment charge1		198.9			-
Other		(4.6	)		(5.9	)
Movement in deferred taxes		1.4			(20.8	)
Equity in earnings of equity method investees		(0.4	)		(0.9	)

Changes in operating assets and liabilities:
Increase in accounts receivable		(51.3	)		(65.2	)
Increase in sales deduction accrual		44.4			54.5
Increase in inventory		(29.1	)		(25.0	)
(Increase)/decrease in prepayments and other assets		(61.8	)		17.2
Decrease in accounts and notes payable and other liabilities		(93.5	)		(30.3	)
Net cash provided by operating activities (A)		160.4			257.0

CASH FLOWS FROM INVESTING ACTIVITIES:
Movements in restricted cash		(2.2	)		5.7
Purchases of subsidiary undertakings and businesses, net of cash acquired		(77.2	)		-
Purchases of non-current investments		(2.8	)		(4.1	)
Purchases of property, plant and equipment ("PP&E")		(47.3	)		(31.7	)
Purchases of intangible assets		-			(22.0	)
Proceeds received on sale of product rights		4.8			5.6
Proceeds from capital expenditure grants		2.7			8.4
Proceeds from disposal of non-current investments and PP&E		0.7			3.8
Returns from equity investments		-			0.1
Net cash used in investing activities (B)		(121.3	)		(34.2	)

SHIRE PLC

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

	2013			2012
		$’M			$’M
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to acquire shares under share buy-back program		(70.6	)		-
Deferred contingent consideration payments		(6.0	)		-
Excess tax benefit associated with exercise of stock options		4.4			34.8
Other		(0.7	)		0.6
Net cash (used in)/provided by financing activities(C)		(72.9	)		35.4
Effect of foreign exchange rate changes on cash and cash equivalents (D)		2.3			1.2
Net (decrease)/increase in cash and cash equivalents (A+B+C+D)		(31.5	)		259.4
Cash and cash equivalents at beginning of period		1,482.2			620.0
Cash and cash equivalents at end of period		1,450.7			879.4

Supplemental information associated with continuing

operations:

	2013			2012
		$’M			$’M

Interest paid		(1.0	)		(1.1	)
Income taxes paid		(96.1	)		(29.5	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PLC

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	Summary of Significant Accounting Policies

(a)	Basis of preparation

These interim financial statements of Shire plc and its subsidiaries (collectively “Shire” or the “Company”) and other financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and US Securities and Exchange Commission (“SEC”) regulations for interim reporting.

The balance sheet as at December 31, 2012 was derived from audited financial statements but does not include all disclosures required by US GAAP.

These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year to December 31, 2012.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period and the Company believes that the disclosures are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year.

(b)	Use of estimates in interim financial statements

The preparation of interim financial statements, in conformity with US GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of intangible assets, the valuation of equity investments, sales deductions, income taxes (including provisions for uncertain tax positions and the realization of deferred tax assets), provisions for litigation and legal proceedings, contingent consideration receivable from product divestments and contingent consideration payable in respect of business combinations and asset purchases. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.

(c)	New accounting pronouncements

Adopted during the period

Indefinite-Lived Intangible Assets (Other than Goodwill) Impairment Testing

In July 2012 the FASB issued guidance on the testing of indefinite-lived intangible assets for impairment. The guidance permits an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, performing the impairment test is unnecessary. The more-likely-than-not threshold is defined as a likelihood of more than 50 percent. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the impairment test and may resume performing the qualitative assessment in any subsequent period. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company’s consolidated financial position, results of operations or cash flows.

Disclosure about offsetting assets and liabilities

In December 2011 the FASB issued guidance on disclosures about offsetting assets and liabilities. In January 2013 FASB amended the previous guidance to clarify the scope of guidance issued in December 2011. The amended guidance requires entities to disclose both gross and net information about derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with FASB guidance on topics “Balance Sheet” and “Derivatives and Hedging” or

subject to an enforceable master netting arrangement or similar agreement; to enable users of financial statements to understand the effects or potential effects of those arrangements on its financial position. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company’s consolidated financial position, results of operations or cash flows. Enhanced disclosure of balance sheet offsetting as required by this guidance is included in Note 14.

Amounts reclassified out of Comprehensive Income

In February 2013 the FASB issued guidance on reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires entities to provide information about the amount reclassified out of comprehensive income by component and presents either on the face of the financial statements or in the notes, significant amounts reclassified out of other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under US GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under US GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under US GAAP that provide additional detail about those amounts. The guidance has been adopted prospectively from January 1, 2013. The adoption of the guidance did not impact the Company’s consolidated financial position, results of operations or cash flows.

2.	Business combinations

Acquisition of SARcode Bioscience Inc. (“SARcode”)

On April 17, 2013 Shire completed the acquisition of 100% of the outstanding share capital of SARcode, a privately held biopharmaceutical company based in Brisbane, California. After customary closing adjustments, cash consideration paid on closing amounted to $150 million. Further contingent cash consideration of up to $525 million may be payable by Shire in future periods, dependent upon achievement of certain clinical, regulatory, and net sales milestones.

This acquisition brings the new Phase 3 compound, Lifitegrast, currently under development for the signs and symptoms of dry eye disease, into Shire’s portfolio. Shire anticipates launching Lifitegrast in the United States as early as 2016 pending a positive outcome of the Phase 3 clinical development program and regulatory approvals. Shire is acquiring the global rights to Lifitegrast and will evaluate an appropriate regulatory filing strategy for markets outside of the United States.

The acquisition of SARcode will be accounted for as a business combination using the acquisition method. The assets acquired and the liabilities assumed from SARcode will be recorded at the date of acquisition, at their fair value. The results of SARcode will be included in Shire’s consolidated income statement from April 17, 2013.

In the three months to March 31, 2013 the Company expensed costs of $0.2 million relating to the SARcode acquisition, which have been recorded within Integration and acquisition costs in the Company’s consolidated income statement. As the initial accounting for this business combination has not yet been completed, further disclosure relating to this acquisition will be included in the Company’s Form 10-Q for the three and six months ended June 30, 2013.

Acquisition of Premacure AB (“Premacure”)

On March 8, 2013 Shire completed the acquisition of 100% of the outstanding share capital of Premacure. The acquisition date fair value of the consideration totaled $140.2 million, comprising cash consideration paid on closing of $30.6 million, and the fair value of contingent consideration payable of $109.6 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods, dependent upon the successful completion of certain development and commercial milestones, is $169 million. Shire will also pay royalties on relevant net sales.

Premacure is developing a protein replacement therapy (“PREMIPLEX”), currently in Phase 2 development, for the prevention of Retinopathy of Prematurity (“ROP”). ROP is a rare and potentially blinding eye disorder that primarily affects premature infants and is one of the most common causes of visual loss in childhood. Together, the acquisitions of SARcode and Premacure build Shire’s presence in the ophthalmology therapeutic area.

The acquisition of Premacure has been accounted for as a business combination using the acquisition method. The assets and the liabilities assumed from Premacure have been recorded at their preliminary fair values at the date of acquisition, being March 8, 2013. The Company’s consolidated financial statements and results of operations include the results of Premacure from March 8, 2013.

development (“IPR&D”) in respect of PREMIPLEX ($151.8 million), net current liabilities assumed ($11.7 million), net non-current liabilities assumed (including deferred tax liabilities) ($29.5 million) and goodwill ($29.6 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. Goodwill arising of $29.6 million, which is not deductible for tax purposes, has been assigned to the HGT operating segment.

In the three months to March 31, 2013 the Company expensed costs of $0.3 million (2012: nil) relating to the Premacure acquisition, which have been recorded within integration and acquisition costs in the Company’s consolidated income statement.

Acquisition of Lotus Tissue Repair, Inc (“Lotus”)

On February 12, 2013 Shire completed the acquisition of 100% of the outstanding share capital of Lotus. The acquisition date fair value of consideration totaled $174.2 million, comprising cash consideration paid on closing of $49.4 million, and the fair value of contingent consideration payable of $124.8 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods is $275.0 million. The amount of contingent cash consideration ultimately payable by Shire is dependent upon achievement of certain pre-clinical and clinical development milestones.

Lotus is developing a proprietary recombinant form of human collagen Type VII (“rC7”) as the first and only intravenous protein replacement therapy currently being investigated for the treatment of Dystrophic Epidermolysis Bullosa (“DEB”). DEB is a devastating orphan disease for which there is no currently approved treatment option other than palliative care. The acquisition adds to Shire’s pipeline a late stage pre-clinical product for the treatment of DEB with global rights. This acquisition is complementary to Shire’s existing investment in developing ABH001, which is currently being investigated as a dermal substitute therapy for the treatment of non-healing wounds in patients with Epidermolysis Bullosa (“EB”).

The acquisition of Lotus has been accounted for as a business combination using the acquisition method. The assets and the liabilities assumed from Lotus have been recorded at their preliminary fair values at the date of acquisition, being February 12, 2013. The Company’s consolidated financial statements and results of operations include the results of Lotus from February 12, 2013.

The purchase price allocation is preliminary pending final determination of the fair values of certain assets acquired and liabilities assumed. The purchase price has been allocated on a preliminary basis to acquired IPR&D in respect of rC7 ($176.7 million), net current assets assumed ($6.8 million), net non-current liabilities assumed (including deferred tax liabilities) ($63.4 million) and goodwill ($54.1 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. Goodwill arising of $54.1 million, which is not deductible for tax purposes, has been assigned to the HGT operating segment.

In the three months to March 31, 2013 the Company expensed costs of $1.0 million (2012: $nil) relating to the Lotus acquisition, which have been recorded within integration and acquisition costs in the Company’s consolidated income statement.

Supplemental disclosure of pro forma information

The unaudited pro forma financial information to present the combined results of the operations of Shire, Premacure and Lotus are not provided as the collective impacts of these acquisitions were not material to the Company’s results of operations for any period presented.

3.	Reorganization costs

Turnhout, Belgium Site Closure

On January 23, 2013 Shire announced that it had decided to proceed with a collective dismissal and business closure at its site in Turnhout, Belgium. This decision follows the conclusion of an information and consultation process. Shire will continue to sell RESOLOR in Europe and the supply of RESOLOR for patients in Europe who rely on the medicine will not be affected. In the three months to March 31, 2013, the Company incurred reorganization costs totaling $17.5 million relating to employee involuntary termination benefits and other re-organization costs. The closure of the Turnhout site is expected to be completed by the end of 2013.

At March 31, 2013 a liability of $16.3 million for reorganization costs was recorded within accounts payable and accrued expenses.

4.	Accounts receivable, net

Accounts receivable at March 31, 2013 of $884.4 million (December 31, 2012: $824.2 million), are stated net of a provision for discounts and doubtful accounts of $44.7 million (December 31, 2012: $41.7 million).

Provision for discounts and doubtful accounts:

	2013			2012
		$’M			$’M
As at January 1,		41.7			31.1
Provision charged to operations		76.3			65.4
Provision utilization		(73.3	)		(63.8	)
As at March 31,		44.7			32.7

At March 31, 2013 accounts receivable included $33.2 million (December 31, 2012: $38.5 million) related to royalty income.

5.	Inventories

Inventories are stated at the lower of cost or market and comprise:

	March 31,		December 31,
	2013		2012
	$	’M	$	’M
Finished goods		140.9		124.4
Work-in-progress		236.0		220.6
Raw materials		94.5		91.9
		471.4		436.9

6.	Prepaid expenses and other current assets

	March 31,		December 31,
	2013		2012
	$	’M	$	’M
Prepaid expenses		61.0		31.7
Income tax receivable		164.8		130.6
Value added taxes receivable		17.7		20.9
Other current assets		39.7		38.6
		283.2		221.8

Goodwill

	March 31,		December 31,
	2013		2012
		$’M		$’M
Goodwill arising on businesses acquired		522.8		644.5

In the three months to March 31, 2013 the Company completed the acquisitions of Premacure and Lotus, which resulted in goodwill with a value of $29.6 million and $54.1 million, respectively (see Note 2). The goodwill arising from these acquisitions has been assigned to the HGT operating segment.

During the year to December 31, 2012 the Company completed the acquisition of FerroKin BioSciences, Inc (“FerroKin”) and acquired substantially all the assets and certain liabilities of Pervasis Therapeutics, Inc. (“Pervasis”), which resulted in goodwill of $46.1 million and $2.0 million, respectively. The goodwill of FerroKin has been assigned to the SP operating segment and the goodwill of Pervasis has been assigned to the RM operating segment.

At March 31, 2013 goodwill of $288.9 million (December 31, 2012: $291.1 million) is held in the SP segment, $233.9 million (December 31, 2012: $154.5 million) in the HGT segment and $nil (December 31, 2012: $198.9 million) is held in the RM segment.

	2013			2012
		$’M			$’M
As at January 1,		644.5			592.6
Acquisitions		83.7			-
Goodwill impairment charge		(198.9	)		-
Foreign currency translation		(6.5	)		6.2
As at March 31,		522.8			598.8

Goodwill is tested for impairment at least annually as at October 1 each year. This assessment is also performed whenever there is a change in circumstances that indicates the carrying value of these assets may be impaired.

As at October 1, 2012 the Company determined that the fair value of all reporting units exceeded their book value, indicating that the goodwill allocated to each reporting unit was not impaired. The key assumptions used to determine the fair values of the Company’s reporting units as at October 1, 2012 included expected cash flows for the period from October 1, 2012 to December 31, 2022 and associated discount rates ranging from 13.0% to 14.7%, which were derived from management’s best estimate of the after-tax weighted average cost of capital for each reporting unit.

Subsequent to filing the Annual Report on Form 10-K for the year ended December 31, 2012 the Company identified circumstances which indicated that the carrying value of goodwill in the RM reporting unit may not be recoverable, which triggered an impairment test in advance of the annual testing date.

These circumstances include the results of an independent market research study of the DERMAGRAFT sales potential, commissioned by the Company, which was finalized late in the first quarter of 2013. In addition, whilst the Company still expects DERMAGRAFT to return to growth over coming quarters, the ongoing restructuring of the RM sales and marketing organization and the implementation of a new commercial model (as disclosed in the prior three quarters) are taking longer and having a more pronounced impact on the RM reporting unit than previously expected. As a result of these and other factors forecast future sales are now lower than at the time of acquisition.

The results of the Company’s March 31, 2013 impairment test showed that the carrying amount of the RM reporting unit exceeded its fair value and the implied value of the goodwill was $nil. As a result the Company recorded an impairment charge of $198.9 million related to the goodwill allocated to the RM reporting unit. The RM goodwill impairment charge is not deductible for tax purposes. This is the primary reason that the effective rate of tax in the first quarter of 2013 (46%) is higher than the same period in 2012 (17%). Accumulated goodwill impairment as at March 31, 2013 was $198.9 million (December 31, 2012: $nil).

Key assumptions used to determine the fair value of the RM reporting unit as at March 31, 2013 included expected cash flows for the period from March 31, 2013 to December 31, 2023 and the associated discount rate of 15.1%, which was derived from management’s best estimate of the after-tax weighted average cost of capital for the RM reporting unit.

The Company determined the estimated fair value of the RM reporting unit using discounted cash flow analyses. Discounted cash flow analyses are dependent upon a number of quantitative and qualitative factors including estimates of forecasted revenue, profitability, earnings before interest, taxes, depreciation and amortization, and terminal values. The discount rates applied in the discounted cash flow analyses also have an impact on the estimates of fair value, as use of a higher rate will result in a lower estimate of fair value.

8.	Other intangible assets, net

	March 31,			December 31,
	2013			2012
		$’M			$’M
Amortized intangible assets
Intellectual property rights acquired for currently marketed products		2,446.7			2,462.0
Acquired product technology		710.0			710.0
Other intangible assets		44.4			44.5
		3,201.1			3,216.5
Unamortized intangible assets
Intellectual property rights acquired for IPR&D		557.0			231.0
		3,758.1			3,447.5

Less: Accumulated amortization		(1,100.9	)		(1,059.4	)
		2,657.2			2,388.1

As at March 31, 2013 the net book value of intangible assets allocated to the SP segment was $1,209.5 million (December 31, 2012: $1,238.0 million), to the HGT segment was $782.4 million (December 31, 2012: $474.6 million) and to the RM segment was $665.3 million (December 31, 2012: $675.5 million).

The change in the net book value of other intangible assets for the three months to March 31, 2013 and 2012 is shown in the table below:

	Other intangible assets
	2013			2012
		$’M			$’M
As at January 1,		2,388.1			2,493.0
Acquisitions		328.5			22.0
Amortization charged		(45.9	)		(45.8	)
Foreign currency translation		(13.5	)		19.8
As at March 31,		2,657.2			2,489.0

In the three months to March 31, 2013 the Company acquired intangible assets totaling $328.5 million, relating to intangible assets acquired with Premacure and Lotus (see Note 2 for further details).

Management estimates that the annual amortization charge in respect of intangible assets held at March 31, 2013 will be approximately $198 million for each of the five years to March 31, 2018. Estimated amortization expense can be affected by various factors including future acquisitions, disposals of product rights, regulatory approval and subsequent

amortization of acquired IPR&D projects, foreign exchange movements and the technological advancement and regulatory approval of competitor products.

9.	Accounts payable and accrued expenses

	March 31,		December 31,
	2013		2012
		$’M		$’M
Trade accounts payable and accrued purchases		232.0		208.1
Accrued rebates – Medicaid		477.4		455.6
Accrued rebates – Managed care		209.9		184.9
Sales return reserve		87.8		90.5
Accrued bonuses		38.0		109.0
Accrued employee compensation and benefits payable		101.1		64.5
R&D accruals		78.6		73.5
Provisions for litigation losses and other claims		65.5		118.2
Other accrued expenses		186.9		197.2
		1,477.2		1,501.5

10.	Other current liabilities

	March 31,		December 31,
	2013		2012
		$’M		$’M
Income taxes payable		63.6		78.4
Value added taxes		17.7		23.6
Contingent consideration payable		17.2		16.0
Other current liabilities		44.0		26.1
		142.5		144.1

11.	Other non-current liabilities

	March 31,		December 31,
	2013		2012
		$’M		$’M
Income taxes payable		60.9		58.9
Deferred revenue		11.1		11.4
Deferred rent		11.6		11.9
Insurance provisions		14.8		12.3
Contingent consideration payable		349.6		120.4
Other non-current liabilities		28.5		26.7
		476.5		241.6

12.	Commitments and contingencies

(a)

Leases

Future minimum lease payments under operating leases at March 31, 2013 are presented below:

	Operating
	leases
		$’M
2013		31.5
2014		36.6
2015		29.4
2016		21.2
2017		17.7
2018		12.2
Thereafter		83.4
		232.0

The Company leases land, facilities, motor vehicles and certain equipment under operating leases expiring through 2032. Lease and rental expense amounted to $17.8 million and $12.8 million for the three months to March 31, 2013 and 2012 respectively, which is predominately included in SG&A expenses in the Company’s consolidated income statement.

(b)	Letters of credit and guarantees

At March 31, 2013 the Company had irrevocable standby letters of credit and guarantees with various banks and insurance companies totaling $42.6 million, providing security for the Company’s performance of various obligations. These obligations are primarily in respect of the recoverability of insurance claims, lease obligations and supply commitments.

(c)	Collaborative arrangements

Details of significant updates in collaborative arrangements are included below:

In-licensing arrangements

Collaboration with Acceleron Pharma Inc. (“Acceleron”) for activin receptor type IIB class of molecules

In April 2013, following the results of toxicology studies, Shire discontinued development of HGT4510 and returned Shire’s rights in the asset to Acceleron. The development of HGT4510 was placed on clinical hold in February 2011, subject to the completion of the toxicology studies.

Out-licensing arrangements

Shire has entered into various collaborative arrangements under which the Company has out-licensed certain product or intellectual property rights for consideration such as up-front payments, development milestones, sales milestones and/or royalty payments. In some of these arrangements Shire and the licensee are both actively involved in the development and commercialization of the licensed product and have exposure to risks and rewards dependent on its commercial success. Under the terms of these arrangements, the Company may receive development milestone payments up to an aggregate amount of $39.0 million and sales milestones up to an aggregate amount of $67.0 million. The receipt of these substantive milestones is uncertain and contingent on the achievement of certain development milestones or the achievement of a specified level of annual net sales by the licensee. In the three months to March 31, 2013 Shire received up-front and milestone payments totaling $nil (2012: $6.0 million). In the three months to March 31, 2013 Shire recognized milestone income of $0.5 million (2012: $5.5 million) in other revenues and $14.5 million (2012: $19.1 million) in product sales for shipment of product to the relevant licensee.

(d)	Commitments

(i)	Clinical testing

At March 31, 2013 the Company had committed to pay approximately $451.7 million (December 31, 2012: $424.7 million) to contract vendors for administering and executing clinical trials. The timing of these payments is dependent upon actual services performed by the organizations as determined by patient enrollment levels and related activities.

(ii)	Contract manufacturing

At March 31, 2013 the Company had committed to pay approximately $101.3 million (December 31, 2012: $125.2 million) in respect of contract manufacturing. The Company expects to pay all of these commitments in 2013.

(iii)

Other purchasing commitments

At March 31, 2013 the Company had committed to pay approximately $136.5 million (December 31, 2012: $144.7 million) for future purchases of goods and services, predominantly relating to active pharmaceutical ingredients sourcing. The Company expects to pay $133.6 million of these commitments in 2013.

(iv)	Investment commitments

At March 31, 2013 the Company had outstanding commitments to subscribe for interests in companies and partnerships for amounts totaling $12.5 million (December 31, 2012: $15.2 million) which may all be payable in 2013, depending on the timing of capital calls.

(v)	Capital commitments

At March 31, 2013 the Company had committed to spend $142.5 million (December 31, 2012: $97.0 million) on capital projects.

(e)	Legal and other proceedings

The Company expenses legal costs as they are incurred.

The Company recognizes loss contingency provisions for probable losses when management is able to reasonably estimate the loss. When the estimated loss lies within a range, the Company records a loss contingency provision based on its best estimate of the probable loss. If no particular amount within that range is a better estimate than any other amount, the minimum amount is recorded. Estimates of losses are often developed substantially before the ultimate loss is known, and are therefore refined each accounting period as additional information becomes known. In instances where the Company is unable to develop a reasonable estimate of loss, no loss contingency provision is recorded at that time. As information becomes known a loss contingency provision is recorded when a reasonable estimate can be made. The estimates are reviewed quarterly and the estimates are changed when expectations are revised. An outcome that deviates from the Company’s estimate may result in an additional expense or release in a future accounting period. At March 31, 2013 provisions for litigation losses, insurance claims and other disputes totaled $80.3 million (December 31, 2012: $130.5 million).

The Company’s principal pending legal and other proceedings are disclosed below. The outcomes of these proceedings are not always predictable and can be affected by various factors. For those legal and other proceedings for which it is considered at least reasonably possible that a loss has been incurred, the Company discloses the possible loss or range of possible loss in excess of the recorded loss contingency provision, if any, where such excess is both material and estimable.

VYVANSE

In May and June 2011, Shire was notified that six separate Abbreviated New Drug Applications ("ANDAs") were submitted under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of VYVANSE. The notices were from Sandoz, Inc. ("Sandoz"); Amneal Pharmaceuticals LLC ("Amneal"); Watson Laboratories, Inc.; Roxane Laboratories, Inc. ("Roxane"); Mylan Pharmaceuticals, Inc.; and Actavis Elizabeth LLC and Actavis Inc. (collectively, "Actavis"). Within the requisite 45 day period, Shire filed lawsuits for infringement of certain of Shire's VYVANSE patents in the US District Court for the District of New Jersey against each of Sandoz, Roxane, Amneal and Actavis; in the

US District Court for the Central District of California against Watson Laboratories, Inc.; and in the US District Court for the Eastern District of New York against Mylan Pharmaceuticals, Inc. and Mylan Inc. (collectively "Mylan"). On December 9, 2011, the District Court of New Jersey consolidated the Sandoz, Roxane, Amneal and Actavis cases. On January 5, 2012, the Watson case was transferred to the District Court of New Jersey, but not consolidated with the other cases. The filing of the lawsuits triggered a stay of approval of all six ANDAs for up to 30 months from the expiration of the new chemical entity exclusivity, which will expire on August 23, 2014. In December 2011 and February 2012, Shire received additional notifications that Mylan had filed further certifications challenging other VYVANSE patents listed in the Orange Book. Within the requisite 45 day period, Shire filed a new lawsuit against Mylan, Johnson Matthey Pharmaceutical Materials and Johnson Matthey Inc. in New Jersey. In December 2012, the parties completed a Markman briefing. No date for the Markman hearing has been set, nor has any ruling been rendered. No trial dates have been set. In February 2013, Shire withdrew its lawsuit against Watson following Watson’s withdrawal of its ANDA.

INTUNIV

In March and April 2010, Shire was notified that three separate ANDAs were submitted under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of INTUNIV. The notices were from Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (collectively, “Teva”); Actavis; and Anchen Pharmaceuticals, Inc. and Anchen, Inc. (collectively, "Anchen"). Within the requisite 45 day period, Shire filed lawsuits in the US District Court for the District of Delaware against each of Teva, Actavis and Anchen for infringement of certain of Shire’s INTUNIV patents. The filing of the lawsuits triggered a stay of approval of these ANDAs for up to 30 months. These lawsuits have been consolidated. A Markman hearing was held on February 14, 2012, and a written Markman decision was given by the court on March 22, 2012. The Anchen lawsuit was settled in September 2012. This settlement provides TWi Pharmaceuticals, Inc. (“TWi”), the acquirer of Anchen’s ANDA, with a license to make, and Anchen a license to market, TWi’s generic versions of INTUNIV in the United States 181 days after Actavis’s launch of generic INTUNIV, or earlier in certain circumstances. Such sales will require the payment of a royalty to Shire, except in certain circumstances. Also as part of the settlement, under certain circumstances Shire may authorize Anchen to sell authorized generic versions of INTUNIV supplied by Shire, on which Shire will receive a significant royalty. A bench trial against Actavis and Teva was held from September 17, 2012 through September 20, 2012. A decision has not yet been given. The lawsuit against Actavis was settled in April 2013. This settlement provides Actavis with a license to make and market Actavis’s generic versions of INTUNIV in the United States on December 1, 2014, or earlier in certain circumstances. Such sales will require the payment of a royalty of 25% of gross profits to Shire during the 180 day period of Actavis’s exclusivity.

In October 2010, Shire was notified that two separate ANDAs were submitted under the Hatch-Waxman Act seeking permission to market generic versions of the 4mg strength of INTUNIV. The notices were from Watson Pharmaceuticals, Inc. and from Impax Laboratories, Inc. (“Impax”). Shire was subsequently advised that Impax amended its ANDA to include the 1mg, 2mg and 3mg strengths of INTUNIV. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Northern District of California against each of Watson Pharmaceuticals, Inc., Watson Laboratories, Inc.-Florida, Watson Pharma, Inc., ANDA, Inc. (collectively “Watson”) and Impax for infringement of certain of Shire’s INTUNIV patents. The filing of the lawsuit triggered a stay of approval of these ANDAs for up to 30 months. A Markman hearing was held on May 30, 2012, and a written Markman decision was given by the court on June 1, 2012. A trial is scheduled to begin on February 10, 2014. The lawsuit against Watson was settled in April 2013. This settlement provides Watson with a license to make and market Watson’s generic versions of INTUNIV in the United States, 181 days after Actavis’s launch of generic INTUNIV, or earlier in certain circumstances.

In February 2011, Shire was notified that Mylan Pharmaceuticals, Inc. submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of the 4mg strength of INTUNIV. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Southern District of New York against Mylan for infringement of certain of Shire’s INTUNIV patents. In April 2011, Shire filed a lawsuit against Mylan in the US District Court for the District of West Virginia for infringement of certain of Shire’s INTUNIV patents and dismissed the lawsuit in the Southern District of New York. Shire was subsequently advised that Mylan amended its ANDA to include the 1mg, 2mg and 3mg strengths of INTUNIV. Within the requisite 45 day period, Shire filed another lawsuit against Mylan in the US District Court for the District of West Virginia. The Mylan lawsuit was settled in March 2013. This settlement provides Mylan with a license to make and market Mylan’s generic versions of INTUNIV in the United States 181 days after Actavis’s launch of generic INTUNIV, or earlier in certain circumstances. Such sales will require the payment of a royalty to Shire, except in certain circumstances.

In March 2011, Shire was notified that Sandoz had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of the 4mg strength of INTUNIV. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the District of Colorado against Sandoz for infringement of certain of Shire’s INTUNIV patents. The filing of the lawsuit triggered a stay of approval of this ANDA for up to 30 months. Shire was subsequently advised that Sandoz amended its ANDA to include the 1mg, 2mg and 3mg strengths of INTUNIV. Within the requisite 45 day period, Shire filed another lawsuit against Sandoz in the US District Court for the District of Colorado. The filing of the lawsuit triggered a stay of approval of the 1mg, 2mg and 3mg strengths for up to 30 months. The Sandoz lawsuit was settled in

April 2013. This settlement provides Sandoz with a license to make and market Sandoz’s generic versions of INTUNIV in the United States 181 days after Actavis’ launch of generic INTUNIV, or earlier in certain circumstances. Such sales will require the payment of a royalty to Shire, except in certain circumstances.

On March 22, 2012, US Patent No. 5,854,290, one of the patents-in-suit in all the INTUNIV litigations referenced above was dedicated to the public by the inventors. Two other patents relating to formulations of guanfacine remain in each of the lawsuits regarding INTUNIV. Those two patents expire on December 20, 2020 and July 4, 2022.

FOSRENOL

In February 2009 Shire was notified that three separate ANDAs were submitted under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of FOSRENOL. The notices were received from Barr Laboratories, Inc. (“Barr”); Mylan, Inc., Mylan Pharmaceuticals, Inc. and Matrix Laboratories, Inc. (collectively, “Mylan-Matrix”); and Natco Pharma Limited (“Natco”). In December 2010, Shire was notified that Alkem Laboratories Ltd. (“Alkem”) submitted an ANDA under the Hatch-Waxman Act seeking permission to market generic versions of all approved strengths of FOSRENOL. Within the requisite 45 day period, Shire filed lawsuits in the US District Court for the Southern District of New York against each of Barr, Mylan-Matrix and Natco and in both the US District Court for the Southern District of New York and the US District Court for the Northern District of Illinois against Alkem for infringement of certain of Shire’s FOSRENOL patents. In April 2011, Shire and Barr reached a settlement which provides Barr with a license to market its own generic version of FOSRENOL in the US but only after October 1, 2021, or earlier under certain circumstances. No payments to Barr are involved with the settlement. As a result of the settlement, the lawsuit against Barr was subsequently dismissed. The lawsuits against both Mylan-Matrix and Alkem have been dismissed, and consequently, each of Mylan-Matrix and Alkem may enter the market upon US Food and Drug Administration (“FDA”) approval of their respective versions of generic FOSRENOL. In April 2012 the 30 month stay of approval with respect to Natco expired. In April 2013 Shire dismissed its lawsuit against Natco, and consequently Natco may enter the market upon FDA approval of its version of generic FOSRENOL.

In January 2013 Shire was notified that Mylan Pharmaceuticals ULC. had submitted an abbreviated new drug submission seeking permission to market generic versions of all approved strengths of FOSRENOL in Canada. In March 2013, Shire commenced proceedings under the Canadian Patented Medicines (Notice of Compliance) Regulations. A stay of approval of up to 24 months has been imposed by Health Canada on Mylan Pharmaceuticals ULC's submission.

LIALDA

In May 2010 Shire was notified that Zydus Pharmaceuticals USA, Inc. (“Zydus”) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the District of Delaware against Zydus and Cadila Healthcare Limited, doing business as Zydus Cadila. As of February 22, 2013, the case has been administratively closed. No further activity will take place until after one of the parties files a motion to reopen the case.

In February 2012, Shire was notified that Osmotica Pharmaceutical Corporation ("Osmotica") had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Northern District of Georgia against Osmotica. The filing of the lawsuit triggered a stay of approval of the ANDA for up to 30 months. The court has appointed a special master to assist with a Markman hearing and to preside over any discovery pursuits. No Markman hearing date has been set. No trial date has been set.

In March 2012, Shire was notified that Watson Laboratories Inc.-Florida had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Southern District of Florida against Watson Laboratories Inc.-Florida and Watson Pharmaceuticals, Inc. The filing of the lawsuit triggered a stay of approval of the ANDA for up to 30 months. In August 2012, Shire filed an amended complaint adding Watson Pharma, Inc. and Watson Laboratories, Inc. as defendants. A Markman hearing was held on December 20, 2012 and a written Markman decision was given by the court on January 17, 2013. A trial took place on April 8, 2013 through April 12, 2013. Closing arguments took place on April 26, 2013. No decision has been rendered.

In April 2012, Shire was notified that Mylan Pharmaceuticals, Inc. had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of LIALDA. Within the requisite 45 day period, Shire filed a lawsuit in the US District Court for the Middle District of Florida against Mylan. The filing of the lawsuit triggered a stay of approval of the ANDA for up to 30 months. No date for a Markman hearing has been set. A trial is scheduled to begin on June 2, 2014.

ADDERALL XR

On November 1, 2010 Impax filed suit against Shire in the US District Court for the Southern District of New York claiming that Shire was in breach of its supply contract for the authorized generic version of ADDERALL XR. Shire’s ability to supply this product is limited by quota restrictions that the US Drug Enforcement Administration places on amphetamine, which is the product’s active ingredient. Impax sought specific performance, equitable relief and damages. Shire filed a counterclaim against Impax seeking damages and a declaratory judgment that Shire had satisfied its obligations under the supply contract. On February 7, 2013 Shire and Impax settled this dispute and agreed to discontinue all court and related proceedings. Under the terms of the settlement Shire made a one-time cash payment to Impax of $48.0 million in the first quarter of 2013. Also as part of the settlement, the parties have entered into an amended supply agreement which will govern the supply of authorized generic ADDERALL XR from Shire to Impax until the end of the supply term on September 30, 2014.

In February 2011, Shire was notified that Watson Laboratories, Inc.-Florida had submitted an ANDA under the Hatch-Waxman Act seeking permission to market a generic version of all approved strengths of ADDERALL XR. This new ANDA is not covered under the existing settlement agreements entered into in November 2007 between Shire and Watson Pharmaceuticals, Inc. (the “Settlement Agreements”). The Settlement Agreements cover a different ANDA and do not provide any license for Watson Laboratories, Inc.-Florida to sell the products covered in Watson Laboratories, Inc.-Florida’s new ANDA. Within the requisite 45 day period, Shire filed a lawsuit in the U.S. District Court for the Southern District of New York against Watson Pharmaceuticals, Inc., Watson Laboratories, Inc.-Florida, Watson Pharm, Inc., Andrx Corporation, and Andrx Pharmaceuticals, L.L.C. for infringement of certain of Shire’s ADDERALL XR patents and also for breach of contract in connection with the Settlement Agreements. The filing of the lawsuit triggered a stay of approval of this ANDA for up to 30 months. A Markman hearing was held on June 13, 2012 but no decision has been rendered. On June 22, 2012, the FDA responded to Shire’s ADDERALL XR citizen petition and set forth more stringent bioequivalence standards that all ANDAs for ADDERALL XR must meet for approval. On July 30, 2012, Shire filed a request with the U.S. District Court for the Southern District of New York seeking a 90-day stay of these legal proceedings because Shire believes Watson Laboratories, Inc.-Florida’s ANDA fails to meet the FDA’s new bioequivalence standards and will not receive FDA approval. The judge granted the 90-day stay on August 3, 2012. On January 18, 2013, Shire, in conjunction with Watson and Par Pharmaceutical, Inc. (the successor-in-interest to Watson’s ANDA for ADDERALL XR), filed a Stipulation and Order of Dismissal for all claims, counterclaims and defenses. Shire agreed to dismiss the pending proceedings without prejudice because Par has withdrawn its ANDA for ADDERALL XR and therefore Shire has no reason to continue with the litigation. The Stipulation and Order of Dismissal was ordered by the Judge on January 23, 2013, and the litigation has been dismissed.

In February 2013, Shire was notified that Neos Therapeutics, Inc. had submitted a New Drug Application under section 505(b)(2) of the Hatch Waxman Act (“505(b)(2) Application”). The 505(b)(2) Application was submitted with a paragraph IV certification for the patents listed in the Orange Book. Within the requisite 45 day period, Shire filed a lawsuit in the Northern District of Texas against Neos Therapeutics, Inc. for infringement of certain of Shire’s ADDERALL XR patents. The filing of the lawsuit triggered a stay of final approval of the 505(b)(2) Application for 30 months. No trial date has been set.

DERMAGRAFT

On January 4, 2013 Shire was notified that the Massachusetts Institute of Technology (“MIT”) filed a lawsuit against Shire in the US District Court for the District of Massachusetts, alleging that Shire’s manufacture, use and sale of DERMAGRAFT infringes patents owned by MIT. The three US patents asserted by MIT are US Patent Nos. 5,759,830, 5,770,417 and 5,770,193. Shire has not yet been served with a Complaint and no trial date has been set.

Subpoena related to ADDERALL XR, DAYTRANA and VYVANSE

On September 23, 2009 the Company received a civil subpoena from the US Department of Health and Human Services Office of Inspector General in coordination with the US Attorney for the Eastern District of Pennsylvania seeking production of documents related to the sales and marketing of ADDERALL XR, DAYTRANA and VYVANSE. The investigation covered whether Shire engaged in off-label promotion and other conduct that may implicate the civil False Claims Act.

On February 1, 2013 the Company announced it had reached an agreement in principle to resolve this matter. The agreement also addresses sales and marketing practices relating to LIALDA and PENTASA pursuant to a subsequent voluntary disclosure made by the Company. Shire cooperated with the US Government throughout the process that led to this agreement in principle.

The Company has recorded a $57.5 million charge comprised of the agreement in principle amount, interest and costs, which has been charged to SG&A in the fourth quarter of 2012. The agreement in principle is subject to change until this

matter is finally resolved. Discussions between the Company and the US Government are ongoing to establish a final resolution to the investigation.

Investigation related to DERMAGRAFT

Shire understands that the Department of Justice, including the US Attorney’s Office for the Middle District of Florida, Tampa Division and the US Attorney’s Office for Washington, DC, is conducting civil and criminal investigations into the sales and marketing practices of ABH relating to DERMAGRAFT. Shire is cooperating fully with these investigations. Shire is not in a position at this time to predict the scope, duration or outcome of these investigations.

Civil Investigative Demand for ADDERALL XR, ADDERALL XR Authorized Generics and VYVANSE

On April 5, 2012 Shire received a Civil Investigative Demand (“CID”) from the United States Federal Trade Commission (“FTC”) requesting that Shire provide it with certain information regarding the supply and reported shortages of ADDERALL XR and its authorized generics and the marketing and sale of ADDERALL XR, its authorized generics and VYVANSE. Shire believes the CID was triggered by reports of product shortages of ADDERALL XR and the authorized generic products in 2011. Shire is cooperating fully with the FTC. At this time, Shire is unable to predict the outcome or duration of this investigation.

13.	Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income, net of their related tax effects, in the three months to March 31, 2013 are included below:

	Foreign currency translation adjustment			Unrealized holding gain/(loss) on available-for-sale securities			Accumulated other comprehensive income
		$M			$M			$M

As at January 1, 2013		85.1			1.8			86.9
Current period change		(36.1	)		(1.7	)		(37.8	)
As at March 31, 2013		49.0			0.1			49.1

14.	Financial instruments

Treasury policies and organization

The Company’s principal treasury operations are coordinated by its corporate treasury function. All treasury operations are conducted within a framework of policies and procedures approved annually by the Board. As a matter of policy, the Company does not undertake speculative transactions that would increase its currency or interest rate exposure.

Interest rate risk

The Company is exposed to interest rate risk on restricted cash, cash and cash equivalents and on foreign exchange contracts on which interest is at floating rates. This exposure is primarily related to US dollar, Pounds sterling, Euro and Canadian dollar interest rates. As the Company maintains all of its cash, liquid investments and foreign exchange contracts on a short term basis for liquidity purposes, this risk is not actively managed. In the three months to March 31, 2013 the average interest rate received on cash and liquid investments was less than 1% per annum. The largest proportion of these cash and liquid investments was in US dollar money market and liquidity funds.

The Company incurs interest at a fixed rate of 2.75% on its $1,100 million in principal amount convertible bonds due 2014.

No derivative instruments were entered into during the three months to March 31, 2013 to manage interest rate exposure. The Company continues to review its interest rate risk and the policies in place to manage the risk.

Credit risk

Financial instruments that potentially expose Shire to concentrations of credit risk consist primarily of short-term cash investments, derivative contracts and trade accounts receivable (from product sales and from third parties from which the

Company receives royalties). Cash is invested in short-term money market instruments, including money market and liquidity funds and bank term deposits. The money market and liquidity funds in which Shire invests are all triple A rated by both Standard and Poor’s and by Moody’s credit rating agencies.

The Company is exposed to the credit risk of the counterparties with which it enters into derivative instruments. The Company limits this exposure through a system of internal credit limits which vary according to ratings assigned to the counterparties by the major rating agencies. The internal credit limits are approved by the Board and exposure against these limits is monitored by the corporate treasury function. The counterparties to these derivatives contracts are major international financial institutions.

The Company’s revenues from product sales in the US are mainly governed by agreements with major pharmaceutical wholesalers and relationships with other pharmaceutical distributors and retail pharmacy chains. For the year to December 31, 2012 there were three customers in the US that accounted for 50% of the Company’s product sales. However, such customers typically have significant cash resources and as such the risk from concentration of credit is considered acceptable. The Company has taken positive steps to manage any credit risk associated with these transactions and operates clearly defined credit evaluation procedures. However, an inability of one or more of these wholesalers to honor their debts to the Company could have an adverse effect on the Company’s financial condition and results of operations.

A substantial portion of the Company’s accounts receivable in countries outside of the United States is derived from product sales to government-owned or government-supported healthcare providers. The Company’s recovery of these accounts receivable is therefore dependent upon the financial stability and creditworthiness of the relevant governments. In recent years the creditworthiness and general economic condition of a number of Eurozone countries (including Greece, Ireland, Italy, Portugal and Spain (the “Relevant Countries”)) has deteriorated. As a result, in some of these countries the Company is experiencing delays in the remittance of receivables due from government-owned or government-supported healthcare providers. The Company continued to receive remittances in relation to government-owned or government-supported healthcare providers in all the Relevant Countries in the three months to March 31, 2013, including receipts of $21.8 million and $21.0 million in respect of Spanish and Italian receivables, respectively.

To date the Company has not incurred significant losses on accounts receivable in the Relevant Countries, and continues to consider that such accounts receivable are recoverable. The Company will continue to evaluate all its accounts receivable for potential collection risks and has made provision for amounts where collection is considered to be doubtful. If the financial condition of the Relevant Countries or other Eurozone countries suffer significant deterioration, such that their ability to make payments becomes uncertain, or if one or more Eurozone member countries withdraws from the Euro, additional allowances for doubtful accounts may be required, and losses may be incurred, in future periods. Any such loss could have an adverse effect on the Company’s financial condition and results of operations.

Foreign exchange risk

The Company trades in numerous countries and as a consequence has transactional and translational foreign exchange exposures.

Transactional exposure arises where transactions occur in currencies different to the functional currency of the relevant subsidiary. The main trading currencies of the Company are the US dollar, Pounds Sterling, Swiss Franc and the Euro. It is the Company’s policy that these exposures are minimized to the extent practicable by denominating transactions in the subsidiary’s functional currency.

Where significant exposures remain, the Company uses foreign exchange contracts (being spot, forward and swap contracts) to manage the exposure for balance sheet assets and liabilities that are denominated in currencies different to the functional currency of the relevant subsidiary. These assets and liabilities relate predominantly to intercompany financing and specific external receivables. The foreign exchange contracts have not been designated as hedging instruments. Cash flows from derivative instruments are presented within net cash provided by operating activities in the consolidated cash flow statement, unless the derivative instruments are economically hedging specific investing or financing activities.

Translational foreign exchange exposure arises on the translation into US dollars of the financial statements of non-US dollar functional subsidiaries.

At March 31, 2013 the Company had 22 swap and forward foreign exchange contracts outstanding to manage currency risk. The swaps and forward contracts mature within 90 days. The Company did not have credit risk related contingent features or collateral linked to the derivatives. The Company has master netting agreements with a number of counterparties to these foreign exchange contracts and on the occurrence of specified events, the Company has the ability to terminate contracts and settle them with a net payment by one party to the other. The Company has elected to present derivative assets and derivative liabilities on a gross basis in the consolidated balance sheet. As at March 31,

2013 the potential effect of rights of set off associated with the foreign exchange contracts would be an offset to both assets and liabilities of $0.2 million, resulting in net derivative assets and derivative liabilities of $4.7 million and $0.7 million, respectively. Further details are included below:

		Fair value		Fair value
		March 31,		December 31,
		2013		2012
			$’M		$’M
Assets	Prepaid expenses and other current assets		4.9		1.3
Liabilities	Other current liabilities		0.9		3.0

Net losses (both realized and unrealized) arising on foreign exchange contracts have been classified in the consolidated statements of income as follows:

	Location of net loss recognized in income	Amount of net loss recognized in income
In the three months to		March 31,			March 31,
		2013			2012
			$’M			$’M
Foreign exchange contracts	Other income, net		(1.6	)		(0.8	)

These net foreign exchange losses are offset within Other income, net by net foreign exchange gains/(losses) arising on the balance sheet items that these contracts were put in place to manage.

15.	Fair value measurement

Assets and liabilities that are measured at fair value on a recurring basis

As at March 31, 2013 and December 31, 2012 the following financial assets and liabilities are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

	Carrying		Fair value
	value
			Total		Level 1		Level 2		Level 3
At March 31, 2013	$'M		$'M		$'M		$'M		$'M
Financial assets:
Available-for-sale securities(1)		12.0		12.0		12.0		-		-
Contingent consideration receivable (2)		37.7		37.7		-		-		37.7
Foreign exchange contracts		4.9		4.9		-		4.9		-

Financial liabilities:
Foreign exchange contracts		0.9		0.9		-		0.9		-
Contingent consideration payable(3)		366.2		366.2		-		-		366.2

			Total		Level 1		Level 2		Level 3
At December 31, 2012	$'M		$'M		$'M		$'M		$'M
Financial assets:
Available-for-sale securities(1)		14.2		14.2		14.2		-		-
Contingent consideration receivable (2)		38.3		38.3		-		-		38.3
Foreign exchange contracts		1.3		1.3		-		1.3		-

Financial liabilities:
Foreign exchange contracts		3.0		3.0		-		3.0		-
Contingent consideration payable(3)		136.4		136.4		-		-		136.4

(1)	Available-for-sale securities are included within Investments in the consolidated balance sheet.

(2)	Contingent consideration receivable is included within Prepaid expenses and other current assets and Other non-current assets in the consolidated balance sheet.

(3)	Contingent consideration payable is included within Other current liabilities and Other non-current liabilities in the consolidated balance sheet.

Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instrument.

The following methods and assumptions were used to estimate the fair value of each material class of financial instrument:

Available-for-sale securities – the fair values of available-for-sale securities are estimated based on quoted market prices for those investments.

Contingent consideration receivable – the fair value of the contingent consideration receivable has been estimated using the income approach (using a probability weighted discounted cash flow method).

Foreign exchange contracts – the fair values of the swap and forward foreign exchange contracts have been determined using an income approach based on current market expectations about the future cash flows.

Contingent consideration payable – the fair value of the contingent consideration payable has been estimated using the income approach (using a probability weighted discounted cash flow method).

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The change in the fair value of the Company’s contingent consideration receivable and payables, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3), are as follows:

Contingent consideration receivable

	2013			2012
	$'M			$'M

Balance at January 1,		38.3			37.8
Gain recognized in the income statement (within Gain on sale of product rights) due to change in fair value during the period		5.4			7.2
Reclassification of amounts to Other receivables within Other current assets		(5.0	)		(5.6	)
Amounts recorded to other comprehensive income (within foreign currency translation adjustments)		(1.0	)		0.8

Balance at March 31,		37.7			40.2

Contingent consideration payable
		2013			2012
	$'M			$'M

Balance at January 1,1		136.4			-
Initial recognition of contingent consideration payable		233.8			-
Loss recognized in the income statement (within Integration and acquisition costs) due to change in fair value during the period		1.8			-
Reclassification of amounts to Other current liabilities		(5.8	)		-
Balance at March 31,		366.2			-

Quantitative Information about Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

Quantitative information about the Company’s recurring Level 3 fair value measurements is included below:

Financial assets:	Fair Value at the Measurement Date

At March 31, 2013	Fair value	Valuation Technique	Significant unobservable Inputs	Range
	$'M
Contingent consideration receivable ("CCR")	37.7	Income approach (probability weighted discounted cash flow)	• Probability weightings applied to different sales scenarios • Future forecast royalties receivable at relevant contractual royalty rates • Assumed market participant discount rate	• 10 to 35% • $14 million to $176 million • 5.7%

Financial liabilities:	Fair Value at the Measurement Date

At March 31, 2013	Fair value	Valuation Technique	Significant unobservable Inputs	Range
	$'M
Contingent consideration payable	366.2	Income approach (probability weighted discounted cash flow)	• Cumulative probability of milestones being achieved • Assumed market participant discount rate • Periods in which milestones are expected to be achieved • Forecast quarterly royalties payable on net sales of relevant products	• 18 to 57% (Weighted average) • 2.3 to 8.7% (Weighted average) • 2013 to 2028 • $1.7 to $7.6 million

The Company re-measures the CCR (relating to contingent consideration due to the Company following divestment of one of the Company’s products) at fair value at each balance sheet date, with the fair value measurement based on forecast cash flows, over a number of scenarios which vary depending on the expected performance outcome of the product following divestment. The forecast cash flows under each of these differing outcomes have been included in probability weighted estimates used by the Company in determining the fair value of the CCR.

Contingent consideration payable represents future milestones the Company may be required to pay in conjunction with various business combinations (see Note 2) and future royalties payable as a result of certain business combinations and license acquisitions. The amount of contingent consideration which may ultimately be payable by Shire in relation to business combinations is dependent upon the achievement of specified future milestones, such as the achievement of certain future development, regulatory and sales milestones. The Company assesses the probability, and estimated timing, of these milestones being achieved and re-measures the related contingent consideration to fair value each balance sheet date. The amount of contingent consideration which may ultimately be payable by Shire in relation to future royalties is dependent upon future net sales of the relevant products over the life of the royalty term. The Company assesses the present value of forecast future net sales of the relevant products and re-measures the related contingent consideration to fair value each balance sheet date.

The fair value of the Company’s contingent consideration receivable and payable could significantly increase or decrease due to changes in certain assumptions which underpin the fair value measurements. Each set of assumptions and milestones are specific to the individual contingent consideration receivable or payable. The assumptions include, among other things, the probability and expected timing of certain milestones being achieved, the forecast future net sales of the relevant products and related future royalties payable, the probability weightings applied to different sales scenarios of one of the Company’s divested products and forecast future royalties receivable under scenarios developed by the Company, and the discount rates used to determine the present value of contingent future cash flows. The Company regularly reviews these assumptions, and makes adjustments to the fair value measurements as required by facts and circumstances.

Financial assets and liabilities that are not measured at fair value on a recurring basis

The carrying amounts and estimated fair values as at March 31, 2013 and December 31, 2012 of the Company’s financial assets and liabilities which are not measured at fair value on a recurring basis are as follows:

March 31, 2013

December 31, 2012

Carrying

amount

Fair value

amount

Fair value

$’M

Financial liabilities:

Convertible bonds (Level 1)

1,100.0

1,201.2

1,100.0

1,228.2

Building financing obligation (Level 3)

7.9

11.2

8.0

10.3

The following methods and assumptions were used to estimate the fair value of each material class of financial instrument:

Convertible bonds – the fair value of Shire’s $1,100 million 2.75% convertible bonds due 2014 is determined by reference to the market price of the instrument as the convertible bonds are publicly traded.

Building finance obligations - the fair value of building finance obligations are estimated based on the present value of future cash flows, and an estimate of the residual value of the underlying property at the end of the lease term, associated with these obligations.

The carrying amounts of other financial assets and liabilities materially approximate to their fair value because of the short-term maturity of these amounts.

16.	Earnings per share

The following table reconciles net income and the weighted average ordinary shares outstanding for basic and diluted earnings per share for the periods presented:


3 months to March 31,	2013		2012
		$’M		$’M
Numerator for basic earnings per share		64.8		238.4
Interest on convertible bonds, net of tax 1		-		8.4
Numerator for diluted earnings per share		64.8		246.8

Weighted average number of shares:
	Millions		Millions
Basic 2		551.5		553.5
Effect of dilutive shares:
Share based awards to employees 3		3.8		8.6
Convertible bonds 2.75% due 2014 4		-		33.5
Diluted		555.3		595.6

1. For the three months ended March 31, 2013 interest on convertible bonds has not been added back as the effect would be anti-dilutive.

2. Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock.

3. Calculated using the treasury stock method.

4. Calculated using the ‘if-converted’ method.

The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below:

	2013		2012
	No. of shares		No. of shares
	Millions		Millions
Share based awards to employees1		5.6		6.1
Convertible bonds 2.75% due 20142		33.6		-

1.	Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire plc’s average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date.

2.	For the three months period to March 31, 2013 the ordinary shares underlying the convertible bonds have not been included in the calculation of the diluted weighted average number of shares, as the effect of their inclusion would be anti-dilutive.

17.	Segmental reporting

For the three months ended March 31, 2013 Shire’s internal financial reporting is in line with its existing business unit and management reporting structure. The Company has three business units and three reportable segments: SP, HGT and RM. The SP, HGT and RM reportable segments represent the Company’s revenues and costs for currently promoted and sold products, together with the costs of developing products for future commercialization. ‘All Other’ has been included in the table below in order to reconcile the three segments to the total consolidated figures.

The Company evaluates performance based on revenue and operating income. The Company does not have inter-segment transactions. Assets that are directly attributable or allocable to the segments have been separately disclosed.

On May 2, 2013 Flemming Ornskov, Chief Executive Officer, announced that there would be a re-alignment of the Company’s business structure to drive future growth and innovation. The Company is continuing to evaluate the timing and impact that this re-alignment will have on its reportable segments.

	SP			HGT		RM			All Other			Total
3 months to March 31, 2013		$’M			$’M		$’M			$’M			$’M
Product sales		746.6			351.6		18.5			-			1,116.7
Royalties		25.5			-		-			13.0			38.5
Other revenues		6.5			0.2		-			-			6.7
Total revenues		778.6			351.8		18.5			13.0			1,161.9

Cost of product sales(1)		85.8			61.6		8.5			-			155.9
Research and development(1)		147.4			69.6		7.2			-			224.2
Selling, general and administrative(1)		257.7			105.6		47.8			27.6			438.7
Goodwill impairment charge		-			-		198.9						198.9
Gain on sale of product rights		(6.5	)		-		-			-			(6.5	)
Reorganization costs		-			-		-			17.5			17.5
Integration and acquisition costs		2.0			1.3		0.8			-			4.1
Total operating expenses		486.4			238.1		263.2			45.1			1,032.8
Operating income/(loss)		292.2			113.7		(244.7	)		(32.1	)		129.1

Total assets		2,388.7			2,200.7		946.9			2,049.3			7,585.6
Long-lived assets(2)		125.8			691.0		44.3			92.8			953.9
Capital expenditure on long-lived assets(2)		12.6			9.3		9.3			6.9			38.1

(1)

Depreciation from manufacturing plants ($7.8 million) is included in Cost of product sales; depreciation of research and development assets ($4.6 million) is included in Research and development; and all other depreciation and amortization ($62.6 million) is included in Selling, general and administrative.

(2)	Long-lived assets comprise all non-current assets (excluding goodwill and other intangible assets, deferred contingent consideration assets, deferred tax assets, investments, income tax receivable and financial instruments).

	SP			HGT		RM			All Other			Total
3 months to March 31, 2012		$’M			$’M		$’M			$’M			$’M
Product sales		706.7			351.4		48.8			-			1,106.9
Royalties		42.4			-		-			13.9			56.3
Other revenues		8.3			0.3		-			-			8.6
Total revenues		757.4			351.7		48.8			13.9			1,171.8

Cost of product sales(1)		87.1			61.3		10.0			-			158.4
Research and development(1)		131.0			86.3		3.0			-			220.3
Selling, general and administrative(1)		300.1			104.4		41.7			53.8			500.0
Gain on sale of product rights		(7.2	)		-		-			-			(7.2	)
Integration and acquisition costs		1.6			-		3.7			-			5.3
Total operating expenses		512.6			252.0		58.4			53.8			876.8
Operating income/(loss)		244.8			99.7		(9.6	)		(39.9	)		295.0

Total assets		2,463.3			1,917.9		961.5			1,375.6			6,718.3
Long-lived assets(2)		126.3			712.1		23.2			61.7			923.3
Capital expenditure on long-lived assets(2)		2.1			13.0		0.1			2.3			17.5

(1)

Depreciation from manufacturing plants ($7.2 million) and amortization of favorable manufacturing contracts ($0.2 million) is included in Cost of product sales; depreciation of research and development assets ($6.4 million) is included in Research and development; and all other depreciation, amortization and impairment charges ($59.2 million) is included in Selling, general and administrative.

(2)	Long-lived assets comprise all non-current assets (excluding goodwill and other intangible assets, deferred contingent consideration assets, deferred tax assets, investments, income tax receivable and financial instruments).

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Shire’s unaudited consolidated financial statements and related notes appearing elsewhere in this report.

Significant events in the three months to March 31, 2013 and recent developments

Shire strategy

On May 2, 2013 Flemming Ornskov, Chief Executive Officer (CEO) set out his strategy for Shire’s future and outlined that there would be a re-alignment of the Company’s business structure to drive future growth and innovation. Shire will continue to grow through focusing on its core strengths of developing and marketing innovative specialist medicines to meet significant unmet patient needs.

Shire’s strategy will be delivered through a sharpened focus on two priorities:

·	Commercial Excellence - driving optimum performance of currently marketed products

·	Pipeline Innovation - building the pipeline of specialty medicines to deliver future value through both Research & Development (R&D) and Business Development (BD)

These priorities will be underpinned by a simplification of the business structure in order to drive commercial excellence and pipeline innovation. Shire will have an “In-Line” marketed product group and a “Pipeline” group, supported by a single technical operations group and simplified, centralized corporate functions.

Delivering the strategy

The newly established “In-Line” marketed products group will consist of five business units (“BU”s) focused exclusively on commercial delivery; Rare Diseases, Neuroscience (formerly Behavioral Health), Gastrointestinal (“GI”), Regenerative Medicine (“RM”) and Internal Medicine (to focus on the commercial delivery of some of Shire’s more mature assets, such as ADDERALL XR, FOSRENOL and XAGRID). More BUs will be formed when significant assets are either acquired or reach the appropriate stage of development.

The Pipeline group, consisting of R&D and BD, will prioritize its activities towards late stage development programs. Pre-clinical development focus will be primarily in Rare Diseases. As part of the delivery of this strategy, Shire's R&D will be led by a single R&D organization. BD will continue to be a key activity for Shire, focused on identifying later stage development programs and in market products in target specialist areas.

In addition to chairing a newly formed Executive Committee, Flemming Ornskov will also chair the “In-Line” and “Pipeline” groups, which will be the engines accountable for driving the profitable growth.

The Company is currently evaluating the impact that this re-alignment will have on its reportable segments.

Geographic expansion

Shire will work to increase the profitability of its existing international business while also investing in Asia and Latin America. Plans are underway for more focused growth in Japan where Shire recently announced the establishment of a new office, and in Brazil. China has also been identified as a priority and Shire is evaluating options for expanding more of the business into this dynamic market.

Products

VYVANSE – for the treatment of Attention Deficit Hyperactivity Disorder (“ADHD”)

On May 1, 2013 Shire announced that the US Food and Drug Administration (“FDA”) approved VYVANSE as a maintenance treatment in children and adolescents with ADHD. With this new approval, VYVANSE is currently the only stimulant approved for maintenance treatment in children and adolescents aged 6 to 17 years with ADHD, as well as in adults with ADHD.

DERMAGRAFT – for the treatment of Diabetic Foot Ulcers (“DFU”) in Canada

·	On March 25, 2013 Shire announced that DERMAGRAFT is now available in Canada for the treatment of DFU, following its approval by Health Canada as a class IV medical device for the treatment of DFU in September 2012.

VPRIV – for the treatment of Gaucher disease (Type 1)

On March 21, 2013 the Committee for Medicinal Products for Human Use of the European Medicines Agency issued a positive opinion regarding an update to the clinical efficacy and safety section of the VPRIV Summary of Product Characteristics to include information on long term clinical data relating to efficacy and safety in skeletal pathology from the TKT025 extension study in Type 1 Gaucher patients.

Pipeline

Lisdexamfetamine dimesylate (“LDX”)¹ – for the treatment of negative symptoms of schizophrenia (“NSS”)

Shire has cancelled Phase 3 of the NSS program after a review and prioritization of Shire’s development portfolio and taking into account investment requirements for recent acquisitions. No patients had been dosed in the studies and this decision was not due to any safety issues with LDX in any patient population. Shire remains committed to continuing Phase 3 trials for MDD and BED and these are enrolling as expected.

¹ Currently marketed as VYVANSE in the US and ELVANSE in certain countries in the EU for the treatment of ADHD.

HGT-4510 – for Duchenne Muscular Dystrophy (“DMD”)

·	In April 2013, following the results of toxicology studies, Shire discontinued development of HGT-4510 and returned Shire’s rights in the asset to Acceleron. The development of HGT-4510 was placed on clinical hold in February 2011, subject to the completion of the toxicology studies.

VASCUGEL – for the treatment of end-stage renal disease

·	In March 2013, Shire enrolled the first patient in its Phase 2 clinical program for VASCUGEL.

OTHER DEVELOPMENTS

Legal Proceedings

INTUNIV patent litigation

On April 25, 2013, Shire settled all pending litigation with Actavis, Inc., Actavis LLC, and Actavis Elizabeth LLC (collectively “Actavis”) and Watson Laboratories, Inc.-Florida, Watson Pharma, Inc. and ANDA, Inc. (collectively “Watson”) in connection with Actavis’s and Watson’s Abbreviated New Drug Applications (“ANDAs”) for generic versions of INTUNIV for the treatment of ADHD.

The settlement provides Actavis with a license to make and market Actavis’s generic versions of INTUNIV in the United States on December 1, 2014, or earlier in certain limited circumstances. Such sales will require the payment of a royalty of 25% of gross profits to Shire during the 180 day period of Actavis’s exclusivity. The settlement also provides Watson with a license to make and market Watson’s generic versions of INTUNIV in the United States, 181 days after Actavis’s launch of generic INTUNIV, or earlier in certain limited circumstances.

Acquisition of SARcode

On April 17, 2013 Shire completed the acquisition of SARcode, a privately held biopharmaceutical company based in Brisbane, California. This acquisition brings a new Phase 3 compound, Lifitegrast, currently under development for the signs and symptoms of dry eye disease, into Shire’s portfolio. Shire anticipates launching Lifitegrast in the United States as early as 2016 pending a positive outcome of the Phase 3 clinical development program and regulatory approvals. Shire is acquiring the global rights to Lifitegrast and will evaluate an appropriate regulatory filing strategy for markets outside of the United States. Shire purchased SARcode for an up-front payment, following customary closing adjustments, of $150 million with further potential contingent payments upon achievement of certain clinical, regulatory and commercial milestones.

Acquisition of Premacure

On March 8, 2013 Shire completed the acquisition of Premacure, a privately held biotechnology company based in Uppsala, Sweden, developing PREMIPLEX, a protein replacement therapy in Phase 2 for the prevention of retinopathy of prematurity (“ROP”). Shire purchased Premacure for an up-front payment of $31 million with further potential contingent payments based on the achievement of pre-specified development and commercial milestones.

Shire will continue the ongoing Phase 2 study, the primary goal of which is to compare the severity of ROP among patients treated with PREMIPLEX, versus an untreated control population matched for gestational age.

The acquisition of SARcode and Premacure will provide Shire with the foundation to build a potential new business unit in Opthalmology – a growing market with many unmet patient needs.

Acquisition of Lotus Tissue Repair, Inc.

On February 12, 2013 Shire completed the acquisition of Lotus, a privately held biotechnology company based in Cambridge, MA, with a protein replacement therapy in pre-clinical development currently being investigated for the treatment of dystrophic epidermolysis bullosa (“DEB”). DEB is a devastating orphan disease for which there is no currently approved treatment option other than palliative care. Shire purchased the company for an upfront cash payment of $49 million and further contingent cash payments may be payable in future periods, depending on the achievement of certain safety and development milestones.

Share buy-back program

In the fourth quarter of 2012 Shire commenced a share buy-back program, for the purpose of returning funds to shareholders, of up to $500 million, through both direct purchases of ordinary shares and through the purchase of ordinary shares underlying American Depositary Receipts. As of April 30, 2013 Shire had made on-market repurchases totaling 7,374,182 ordinary shares at a cost of $222.7 million (excluding transaction costs).

Board and Committee Changes

On May 2, 2013 Shire announced that Susan Kilsby, Non Executive Director of Shire became the Chairman of Shire’s Audit, Compliance & Risk Committee with immediate effect. Susan has been a member of this Committee since September 2011 when she joined the Board. She takes over the Chairmanship from David Kappler who remains a member of the Committee.

On May 2, 2013 Shire also announced that Dr David Ginsburg became Chairman of Shire’s Science & Technology Committee with immediate effect. Dr David Ginsburg has been a member of the Committee and the Board since June 2010 and he has more recently been the acting Chairman of the Science & Technology Committee.

Research and development

Products in registration as at March 31, 2013

VYVANSE for the treatment of ADHD in the US

On April 26, 2013, Shire announced that the FDA had approved VYVANSE as a maintenance treatment in children and adolescents with ADHD. With this new approval, VYVANSE is currently the only stimulant approved for maintenance treatment in children and adolescents ages 6 to 17 years with ADHD, as well as in adults with ADHD.

INTUNIV for the treatment of ADHD in Canada

In October 2011 Shire submitted a New Drug Submission (“NDS”) seeking the approval in Canada for INTUNIV for the treatment of ADHD in children and adolescents aged 6 to 17. Health Canada accepted the NDS for screening in December 2011.

Products in clinical development as at March 31, 2013

Phase 3

LDX for the treatment of inadequate response in major depressive disorder (“MDD”)

A Phase 3 clinical program to assess the efficacy and safety of LDX as adjunctive therapy in patients with MDD was initiated in the fourth quarter of 2011 and is ongoing.

LDX for the treatment of binge eating disorder (“BED”)

A Phase 3 clinical program to evaluate the efficacy and safety of LDX in adults with BED was initiated in the fourth quarter of 2012 and is ongoing.

LDX for the treatment of negative symptoms of schizophrenia (“NSS”)

The Phase 3 program has been cancelled following re-prioritization of portfolio programs.

INTUNIV for the treatment of ADHD in the EU

INTUNIV for the treatment of ADHD in children aged 6 to 17 in the EU was initiated in the fourth quarter of 2011 and is ongoing.

INTUNIV for the treatment of ADHD in Japan

Under a collaboration agreement, Shionogi and Shire will co-develop and sell ADHD products in Japan, including INTUNIV. The INTUNIV program is Phase 3-ready.

XAGRID for the treatment of essential thrombocythaemia in Japan

A Phase 3 clinical program in Japan was initiated in the fourth quarter of 2010 to assess the safety and efficacy of XAGRID in adult essential thrombocythaemia patients treated with cytoreductive therapy who have become intolerant to their current therapy or whose platelet counts have not been reduced to an acceptable level. The program is ongoing.

RESOLOR for the treatment of chronic constipation in males

A Phase 3 European clinical trial to further assess the efficacy of RESOLOR for the treatment of chronic constipation in males was initiated in 2010 and is ongoing.

SPD-555 (prucalopride; marketed as RESOLOR in the EU) for the treatment of chronic constipation in the US

On January 10, 2012, Shire announced that it had acquired the rights to develop and market prucalopride in the US in an agreement with Janssen Pharmaceutica N.V. This product is Phase 3-ready and definitive plans will be implemented following discussions with regulatory authorities.

FIRAZYR for the treatment for Acute Angiotensin Converting Enzyme Inhibitor-Induced Angioedema ( ACE-I AE)

In December 2012, Shire submitted a supplemental Marketing Authorization Application (“MAA”), to the EMA seeking approval for FIRAZYR for the treatment of ACE-I AE in Europe. Depending upon the outcome of discussions with the FDA about appropriate development pathways for FIRAZYR as a possible ACE-I AE treatment option, Phase 3 studies for the US market could begin in 2013.

ABH-001 for the treatment of EB

ABH-001 is in development for the treatment of EB, a rare genetic skin disease that causes the skin to be so fragile that the slightest friction results in painful blisters and open wounds. The company initiated a Phase 3 study in the fourth quarter of 2012 and enrolled the first patient in January 2013. The FDA has granted Fast Track designation for this program.

Phase 2

LDX for the treatment of ADHD in Japan

Under a collaboration agreement, Shionogi and Shire will co-develop and sell ADHD products in Japan, including LDX. The LDX program is Phase 2-ready.

SPD-554 (selective α2A agonist) for the treatment of various central nervous system (“CNS”) disorders

The completed Phase 1 program supports planned progression in hyperactivity in Autism Spectrum Disorder (and potentially other domains where the mechanism may show benefit). This program is Phase 2-ready.

SPD-557 for the treatment of refractory gastroesophageal reflux desease (“rGERD”)

SPD-557 is a selective 5-HT4 receptor agonist. An additional Phase 2b clinical trial has been initiated to assess the efficacy of SPD-557 as an adjunctive therapy for treatment of rGERD in patients with persistent symptoms of regurgitation with or without heartburn while on proton-pump inhibitor therapy.

SPD-602 iron chelating agent for the treatment of iron overload secondary to chronic transfusion

A Phase 2 trial in pediatric and adult patients with transfusional iron overload is ongoing. This product has received orphan drug designation by the EMA and the FDA for the treatment of chronic iron overload requiring chelation therapy.

HGT-4510 for DMD

HGT-4510 (also referred to as ACE-031) was added to the Shire HGT portfolio in 2010 through an exclusive license in markets outside of North America for the activin receptor type IIB (“ActRIIB”) class of molecules being developed by Acceleron. In April 2013, following the results of toxicology studies, Shire discontinued development of HGT-4510 and returned Shire’s rights in the asset to Acceleron.

HGT-2310 for the treatment of Hunter syndrome with CNS symptoms

HGT-2310 is in development as an enzyme replacement therapy (“ERT”) delivered intrathecally for Hunter syndrome patients with CNS symptoms. The Company initiated a Phase 1/2 clinical trial in the first quarter of 2010 which has now completed. Shire is currently planning a pivotal clinical trial which is expected to initiate in the second half of 2013, subject to customary regulatory interactions with the FDA and EMA. This product has been granted orphan designation in the US.

HGT-1410 for Sanfilippo A Syndrome (Mucopolysaccharidosis IIIA)

HGT-1410 is in development as an ERT delivered intrathecally for the treatment of Sanfilippo A Syndrome, a Lysosomal Storage Disorder (“LSD”). The Company initiated a Phase 1/2 clinical trial in August 2010 which has now completed. Shire is currently planning the next clinical trial for HGT-1410, designed to measure a clinical response, which is expected to initiate in the second half of 2013, subject to customary regulatory interactions with the FDA and EMA. The product has been granted orphan drug designation in the US and in the EU.

SRM-003 (formerly referred to as VASCUGEL) for the treatment of improvement in patency of arteriovenous (“AV”) access in hemodialysis patients

SRM-003 is a novel endothelial cell based therapy in development for enhancing blood vessel repair and improving hemodialysis access for patients with end-stage renal disease (“ESRD”). This product has been granted orphan drug designation in the US and the EU. In March 2013, Shire enrolled the first patients in its two Phase 2 studies designed to evaluate the efficacy and safety of SRM003 (VASCUGEL) in improving Arteriovenous Fistula (AVF) maturation and AV Graft (AVG) patency to facilitate hemodialysis in patients with End Stage Renal Disease (ESRD).

Phase 1

HGT-1110 for the treatment of Metachromatic Leukodystrophy (“MLD”)

HGT-1110 is in development as an ERT delivered intrathecally for the treatment of MLD. This product has been granted orphan drug designation in the US and the EU. The Company initiated a Phase 1/2 clinical trial in August 2012. This trial is ongoing.

Other pre-clinical development projects

A number of additional projects are underway in various stages of pre-clinical development for the SP and HGT businesses.

Results of operations for the three months to March 31, 2013 and 2012

Financial highlights for the three months to March 31, 2013 are as follows:

Product sales in the first quarter of 2013 were to $1,117 million up 1% when compared against a strong set of comparatives in the first quarter of 2012.

Five of the Company’s top ten products delivered double digit growth: VYVANSE (up 15% to $298 million), LIALDA/MEZAVANT (up 12% to $101 million), VPRIV (up 14% to $82 million), INTUNIV (up 13% to $78 million) and FIRAZYR (up 112% to $42 million).

Total product sales were held back this quarter by DERMAGRAFT (down 62% to $19 million), resulting from the ongoing restructuring of the RM commercial organization; REPLAGAL (down 15% to $114 million) due to some shipment timings and as increased competition outweighed the continued growth in new naïve patients; and ELAPRASE (down 9% to $114 million) due to uneven ordering patterns in Latin America.

The rate of growth in total product sales (First quarter of 2013: +1%) is expected to improve to mid to high single digit growth for the full year as Shire's portfolio continues to deliver growth and the Company benefits from easing comparatives over the second half of the year.

Total revenues decreased 1% to $1,162 million (2012: $1,172 million) as growth in product sales was offset, as expected, by lower royalties, particularly ADDERALL XR royalties received from Impax Laboratories Inc. (“Impax”) due to both lower volumes and a lower royalty rate payable since the launch of a new generic product.

Operating income was down 56% to $129 million (2012: $295 million) primarily due to an impairment charge for goodwill ($199 million) relating to Shire’s RM business. Following a review of future forecasts for the RM business unit, management determined in the first quarter of 2013 that future sales are now expected to be lower than anticipated at the time of acquisition and consequently in accordance with US GAAP it has been determined that the goodwill attributable to the RM business unit is impaired.

Diluted earnings per ordinary share decreased 72% to $0.12 (2012: $0.41), due to lower operating income and a higher effective tax rate of 46% (2012: 17%) both of which reflect the impact of the impairment of RM goodwill.

Results of operations for the three months to March 31, 2013 and 2012

Total revenues

The following table provides an analysis of the Company’s total revenues by source:

	3 months to		3 months to
	March 31,		March 31,
	2013		2012		change
	$'M		$'M		%
Product sales		1,116.7		1,106.9		+1
Royalties		38.5		56.3		-32
Other revenues		6.7		8.6		-22
Total		1,161.9		1,171.8		-1

Product sales

The following table provides an analysis of the Company’s key product sales:

	3 months to		3 months to
	March 31,		March 31,		Product sales		Non-GAAP CER		US prescription			Exit market
	2013		2012		growth		growth4		growth1			share1
	$'M		$'M		%		%		%			%
SP
Behavioral Health
VYVANSE		298.4		260.0		+15		+15		+6			17
ADDERALL XR		99.8		111.4		-10		-10		-20			5
INTUNIV		77.7		68.5		+13		+13		+12			4
EQUASYM		6.7		7.2		-7		-7		n/a	3		n/a	3

Gastrointestinal ("GI")
LIALDA / MEZAVANT		100.5		90.0		+12		+12		+9			23
PENTASA		71.0		65.8		+8		+8		-3			14
RESOLOR		3.2		2.4		+33		+31		n/a	3		n/a	3


General Products
FOSRENOL		42.3		45.5		-7		-7		-17			4
XAGRID		23.4		23.2		+1		-1		n/a	2		n/a	2
Other product sales		23.6		32.7		-28		-28		n/a			n/a
		746.6		706.7		+6

HGT
ELAPRASE		114.3		125.6		-9		-9		n/a	2		n/a	2
REPLAGAL		114.0		134.4		-15		-15		n/a	3		n/a	3
VPRIV		81.6		71.7		+14		+14		n/a	2		n/a	2
FIRAZYR		41.7		19.7		+112		+111		n/a	2		n/a	2
		351.6		351.4		-
RM
DERMAGRAFT		18.5		48.8		-62		-62		n/a	2		n/a	2
		18.5		48.8		-62
Total product sales		1,116.7		1,106.9		+1

(1)	Data provided by IMS Health National Prescription Audit (“IMS NPA”). Exit market share represents the average monthly US market share in the month ended March 31, 2013.

(2)	IMS NPA Data not available.

(3)	Not sold in the US in the first quarter of 2013.

(4)

The Company’s management analyzes product sales and revenue growth for certain products sold in markets outside of the US on a constant exchange rate (“CER”) basis, so that product sales and revenue growth can be considered excluding movements in foreign exchange rates. Product sales and revenue growth on a CER basis is a Non-GAAP financial measure (“Non-GAAP CER”), computed by comparing 2013 product sales and revenues restated using 2012 average foreign exchange rates to 2012 actual product sales and revenues. Average exchange rates for the three months to March 31, 2013 were $1.58:£1.00 and $1.33:€1.00 (2012: $1.57:£1.00 and $1.31:€1.00).

Specialty Pharmaceuticals

VYVANSE – ADHD

VYVANSE product sales showed strong growth (up 15%) in the first quarter of 2013 compared to the first quarter of 2012, primarily as a result of higher prescription demand (up 6%) and the effect of a price increase taken since the first quarter of 2012. Shire also experienced further destocking in the retail channel which was offset by the positive impact of some shipment slippage from the fourth quarter of 2012.

Litigation proceedings regarding Shire’s VYVANSE patents are ongoing. Further information about this litigation can be found in PART I: ITEM 1 of this Form 10-Q.

ADDERALL XR – ADHD

ADDERALL XR product sales decreased (down 10%) in the first quarter of 2013 primarily as a result of lower US prescription demand (down 20%) following the introduction of a new generic competitor in the second quarter of 2012 and to a lesser extent the effect of higher sales deductions as a percentage of sales in the first quarter of 2013 compared to the first quarter of 2012. These negative factors were partially offset by the benefit of a price increase taken since the first quarter of 2012.

Litigation proceedings regarding Shire’s ADDERALL XR patents are ongoing. Further information about this litigation can be found in PART I: ITEM 1 of this Form 10-Q.

INTUNIV – ADHD

The strong growth in INTUNIV product sales (up 13%) in the first quarter of 2013 was driven by growth in US prescription demand (up 12%) and the effect of price increases taken since the first quarter of 2012. These positive factors were partially offset by the effect of destocking in the first quarter of 2013 as compared to slight stocking in the first quarter of 2012.

Litigation proceedings regarding Shire’s INTUNIV patents are ongoing. Further information about this litigation can be found in PART I: ITEM 1 of this Form 10-Q.

LIALDA/MEZAVANT – Ulcerative colitis

Product sales for LIALDA/MEZAVANT increased (up 12%) in the first quarter of 2013 primarily due to higher market share in the US and the effect of a price increase taken since the first quarter of 2012. These positive factors were to a lesser extent offset by the effect of higher US sales deductions and higher destocking at the retail level.

Litigation proceedings regarding Shire’s LIALDA patents are ongoing. Further information about this litigation can be found in PART I: ITEM 1 of this Form 10-Q.

PENTASA – Ulcerative colitis

PENTASA product sales (up 8%) benefited from price increases taken since the first quarter of 2012 the impact of which was moderated by a small amount of retail pipeline destocking in the first quarter of 2013.

Human Genetic Therapies

ELAPRASE – Hunter syndrome

Product sales from ELAPRASE in the first quarter of 2013 were down 9% compared to the first quarter of 2012 due to the impact of timing of large orders to certain markets which order less frequently. The underlying number of patients being treated with ELAPRASE continues to grow.

REPLAGAL – Fabry disease

REPLAGAL sales for the quarter were down 15% primarily due to the impact of ordering patterns in Latin America and lower volumes in Europe, where the impact of increased competition outweighed the continued growth in new naïve patients. On a global basis, total patient numbers continue to show good long term growth.

VPRIV – Gaucher disease

Growth in VPRIV product sales in the first quarter of 2013 was driven by the continued growth in the number of patients on therapy.

FIRAZYR – Hereditary Angioedema (“HAE”)

The significant growth in FIRAZYR sales (up 112%) reflects the continued success of the product in the US market.

Regenerative Medicine

DERMAGRAFT –DFU

DERMAGRAFT product sales were down 62%, reflecting the impact of an ongoing restructuring of the RM sales and marketing organization and the implementation of a new commercial model. Whilst future expectations for long term growth of DERMAGRAFT have been revised downwards, the Company still expects the product to return to growth over coming quarters.

Royalties

The following table provides an analysis of Shire’s royalty income:

	3 months to		3 months to
	March 31,		March 31,
	2013		2012		Change
	$'M		$'M		%
3TC and ZEFFIX		12.5		13.6		-8
FOSRENOL		9.0		10.0		-10
ADDERALL XR		8.1		25.3		-68
Others		8.9		7.4		+20
Total royalties		38.5		56.3		-32

As expected, royalty income from 3TC and ZEFFIX continued to decline due to increased competition from other products and the expiry of patents in certain territories.

Royalties from ADDERALL XR in the first quarter of 2013 were significantly impacted by reduced sales volume as well as a lower royalty rate payable on sales of authorized generic ADDERALL XR by Impax, since the launch of a new generic version in the second quarter of 2012.

Cost of product sales

Cost of product sales decreased slightly to $155.9 million for the three months to March 31, 2013 (14% of product sales), from $158.4 million in the corresponding period in 2012 (2012: 14% of product sales). Cost of product sales as a percentage of product sales remained constant due to improved margins in the ADHD portfolio which were only partially offset by lower margins on other products. For the three months to March 31, 2013 cost of product sales included depreciation of $7.8 million (2012: $7.2 million) and amortization of $nil (2012: $0.2 million).

R&D

R&D expenditure increased by 2% to $224.2 million for the three months to March 31, 2013 (20% of product sales), compared to $220.3 million in the corresponding period in 2012 (20% of product sales). In the three months to March 31, 2012 R&D included a payment in respect of in-licensed and acquired products of $23.0 million. Excluding this payment R&D increased by 14% due to increased investment in a number of targeted R&D programs including non-ADHD programs for LDX, and spend on SPD602 for Iron Overload and SRM003 for Acute Vascular Repair, acquired since the first quarter of 2012.

R&D in the three months to March 31, 2013 included depreciation of $4.6 million (2012: $6.4 million).

SG&A

SG&A expenditure decreased by 12% to $438.7 million (39% of product sales) for the three months to March 31, 2013 from $500.0 million (45% of product sales) in the corresponding period in 2012. The rate of decline in SG&A in the first quarter of 2013 was accentuated by the high level of SG&A in the first quarter of 2012 relative to the level of spend in subsequent quarters in 2012. Further, the decrease in SG&A benefited from actions taken during last year and careful management of the Company’s cost base.

For the three months to March 31, 2013 SG&A included depreciation of $16.7 million (2012: $13.6 million) and amortization of $45.9 million (2012: $45.6 million).

Goodwill impairment charges

For the three months to March 31, 2013 Shire recorded an impairment charge for goodwill of $198.9 million (2012: $nil) relating to Shire’s RM business. Following a review of future forecasts for the RM business unit, management determined in the first quarter of 2013 that future sales are now expected to be lower than anticipated at the time of acquisition and consequently in accordance with US GAAP, it has been determined that the goodwill attributable to the RM business unit is impaired. Whilst our future expectations for long term growth of DERMAGRAFT have been revised downwards, the Company still expects the product to return to growth over coming quarters.

Gain on sale of product rights

For the three months to March 31, 2013 Shire recorded a gain on sale of product rights of $6.5 million (2012: $7.2 million) following re-measurement of the contingent consideration receivable from the divestment of DAYTRANA.

Reorganization costs

For the three months to March 31, 2013 Shire recorded reorganization costs of $17.5 million (2012: $nil) relating to the collective dismissal and business closure at Turnhout, Belgium.

Integration and acquisition costs

For the three months to March 31, 2013 Shire recorded integration and acquisition costs of $4.1 million primarily associated with the acquisition of Lotus and integration of FerroKin, in addition to charges related to the change in fair value of contingent consideration. In the first quarter of 2012 integration and acquisition costs ($5.3 million) primarily related to the integration of Advanced BioHealing Inc. (“ABH”).

Interest expense

For the three months to March 31, 2013 Shire incurred interest expense of $9.1 million (2012: $10.2 million). Interest expense in the first quarter of 2013 principally relates to the coupon on Shire’s $1,100 million 2.75% convertible bonds due 2014.

Taxation

The effective rate of tax in the first quarter of 2013 was 46% (2012: 17%). The effective rate of tax in the first quarter of 2013 is higher than the same period in 2012 primarily due to the impact of the RM goodwill impairment charge (which is not deductible for tax purposes), an increase in unrecognised tax losses and adverse changes in profit mix. These factors were partially offset by the recognition of the 2012 US R&D credit in the first quarter of 2013. The US R&D credit was recognized in the first quarter of 2013 following the enactment of legislation on January 2, 2013, approving the extension of the regular R&D credit retrospectively.

Financial condition at March 31, 2013 and December 31, 2012

Accounts receivable, net

Accounts receivable, net increased by $60.2 million to $884.4 million (December 31, 2012: $824.2 million), primarily due to the timing of customer receipts. Days sales outstanding increased slightly by two days to 52 days (December 31, 2012: 50 days).

Prepaid expenses and other current assets

Prepaid expenses and other current assets increased by $61.4 million to $283.2 million (December 31, 2012: $221.8 million), primarily due to the timing of payments to tax authorities and third party service providers.

Goodwill

Goodwill decreased by $121.7 million to $522.8 million (December 31, 2012: $644.5 million), principally due to the $198.9 million impairment of RM goodwill, offset by the goodwill arising on the acquisitions of Premacure and Lotus of $83.7 million.

Other intangible assets, net

Other intangible assets increased by $269.1 million to $2,657.2 million (December 31, 2012: $2,388.1 million), due to the IPR&D assets acquired with Premacure and Lotus, offset by intangible asset amortization and foreign exchange movements.

Non-current deferred tax liabilities

Non-current deferred tax liabilities increased by $86.5 million to $607.3 million (December 31, 2012: $520.8 million), primarily due to deferred tax liabilities arising on the IPR&D assets acquired with Premacure and Lotus.

Other non-current liabilities

Other non-current liabilities increased by $234.9 million to $476.5 million (December 31, 2012: $241.6 million) primarily due to the recognition of non-current contingent consideration payable related to the Premacure and Lotus business combinations.

Liquidity and capital resources

General

The Company’s funding requirements depend on a number of factors, including the timing and extent of its development programs; corporate, business and product acquisitions; the level of resources required for the expansion of certain manufacturing and marketing capabilities as the product base expands; increases in accounts receivable and inventory which may arise with any increase in product sales; competitive and technological developments; the timing and cost of obtaining required regulatory approvals for new products; the timing and quantum of milestone payments on collaborative projects; the timing and quantum of tax and dividend payments; the timing and quantum of purchases by the EBT of Shire shares in the market to satisfy awards granted under Shire’s employee share plans; the timing and quantum of purchases of Shire shares under the share buy-back program; and the amount of cash generated from sales of Shire’s products and royalty receipts.

An important part of Shire’s business strategy is to protect its products and technologies through the use of patents, proprietary technologies and trademarks, to the extent available. The Company intends to defend its intellectual property and as a result may need cash for funding the cost of litigation.

The Company finances its activities through cash generated from operating activities; credit facilities; private and public offerings of equity and debt securities; and the proceeds of asset or investment disposals.

Shire’s balance sheet includes $1,450.7 million of cash and cash equivalents at March 31, 2013. Substantially all of Shire’s debt relates to its $1,100 million 2.75% convertible bonds due 2014 (the “Bonds”). In addition, Shire has a revolving credit facility of $1,200 million which matures in 2015 (the “RCF”), which is currently undrawn.

Financing

Shire anticipates that its operating cash flow together with available cash, cash equivalents and the RCF will be sufficient to meet its anticipated future operating expenses, share buy-back program, capital expenditures, tax and interest payments, lease obligations and milestone payments as they become due over the next twelve months.

If the Company decides to acquire other businesses, it expects to fund these acquisitions from existing cash resources, the RCF and possibly through new borrowings and the issue of new equity if necessary.

Share buy-back program

Shire has a strong balance sheet and continued robust cash generation, and considers efficient use of capital on behalf of shareholders an important objective. Therefore, during the year to December 31, 2012 the Company commenced a share buy-back program, for the purpose of returning funds to shareholders, of up to $500 million through both direct purchases of ordinary shares and through the purchase of ordinary shares underlying ADRs.

At March 31, 2013 the Company had made on-market repurchases totaling 6,007,188 Ordinary shares at a cost of $181.4 million (excluding transaction costs). This represents 0.65% of the issued share capital of the Company as at the end of the quarter. Ordinary Shares purchased may be cancelled or be held as treasury shares, in accordance with the authority renewed by shareholders at the Company’s Annual General Meeting (“AGM”). At its AGM on April 24, 2012 the Company was authorized to make market purchases of up to 56,253,208 of its own Ordinary Shares. That authority expired at the AGM held on April 30, 2013 and was renewed. Under the new authority, which expires at the 2014 AGM, the Company was authorized to make market purchases of up to 55,741,587 of its own Ordinary Shares.

The following table provides information about purchases by the Company at March 31, 2013 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.

Period	Total Number of ordinary shares Purchased		Average Price Paid Per ordinary share (£)		Total Number of ordinary shares underlying ADRs Purchased		Average Price Paid Per ordinary share underlying ADRs ($)		Approximate Dollar Value of ordinary shares that May Yet Be Purchased Under the Share Buy-back Program
January 2013		715,203		19.934		336,300		32.360	$360 million
February 2013		448,896		20.748		164,100		31.954	$340 million
March 2013		466,918		20.110		244,200		30.518	$318 million

Sources and uses of cash

The following table provides an analysis of the Company’s gross and net cash/ debt position (excluding restricted cash), as at March 31, 2013 and December 31, 2012:

	March 31,		December 31,
	2013		2012
		$’M		$’M
Cash and cash equivalents1		1,450.7		1,482.2
Convertible bonds		1,100.0		1,100.0
Other		8.8		9.3
Total debt		1,108.8		1,109.3
Net cash		341.9		372.9

(1)

Substantially all of the Company’s cash and cash equivalents are held by foreign subsidiaries (i.e. those subsidiaries incorporated outside of Jersey, Channel Islands, the jurisdiction of incorporation of Shire plc, Shire’s holding company). The amount of cash and cash equivalents held by foreign subsidiaries has not had, and is not expected to have, a material impact on the Company’s liquidity and capital resources.

Cash flow activity

Net cash provided by operating activities for the three months to March 31, 2013 decreased by 38% or $96.6 million to $160.4 million (2012: $257.0 million), as higher cash receipts from gross product sales and lower operating expenditure payments were more than offset by the payment to settle the litigation with Impax ($48 million), lower royalty receipts and higher sales deduction and cash tax payments.

Net cash used in investing activities was $121.3 million in the three months to March 31, 2013, principally relating to the cash paid (net of cash acquired) of $77.2 million for the acquisition of Premacure and Lotus and $47.3 million on the purchase of PP&E.

Net cash used in investing activities was $34.2 million in the three months to March 31, 2012, relating to the purchase of PP&E and intangible assets, partially offset by proceeds received on the sale of product rights and capital expenditure grants.

Net cash used in financing activities was $72.9 million for the three months to March 31, 2013, principally due to the purchase of shares under the share buy-back program.

Net cash provided by financing activities was $35.4 million for the three months to March 31, 2012, principally due to the excess tax benefit associated with the exercise of stock options.

Obligations and commitments

During the three months to March 31, 2013 there have been no material changes outside the ordinary course of the Company’s business to the contractual obligations previously disclosed in PART II: ITEM 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Note 14 to the unaudited consolidated financial statements included in PART I: ITEM 1 of this Form 10-Q and PART II: ITEM 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 contains a discussion of the Company’s exposure to market and other risks.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that the Company files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

As at March 31, 2013 the Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures, including those with respect to the Income Access Share (“IAS”) Trust. The Company’s management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding management’s control objectives. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, including those with respect to the IAS Trust, are effective at the reasonable level of assurance to ensure that information required to be disclosed in reports that the Company files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

There has been no change in the Company’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required by this Item is incorporated herein by reference to Note 12 to the unaudited consolidated financial statements included in PART I: ITEM 1 of this Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors set forth in the Company’s Form 10-K for the year ended December 31, 2012.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

EXHIBITS

2.01	Agreement and Plan of Merger by and among Shire Pharmaceuticals Group plc, Transkaryotic Therapies, Inc. and Sparta Acquisition Corporation, dated as of April 21, 2005.(1)

2.02	Agreement of Merger dated as of February 20, 2007 among Shire plc, Shuttle Corporation and New River Pharmaceuticals, Inc.(2)

2.03	Business Combination Agreement dated as of July 3, 2008 between Maia Elfte Vermögensverwaltungs GmbH and Jerini AG. (3)

2.04	Heads of Agreement by and among Shire plc and Movetis NV relating to a friendly tender offer, dated August 3, 2010. (4)

2.05	Agreement and Plan of Merger, dated as of May 17, 2011, by and among Shire Pharmaceuticals Inc., ABH Merger Sub Inc., Advanced Biohealing, Inc., and solely for the limited purposes set forth therein, Canaan VII L.P. and Shire plc. (5)

2.06	Agreement and Plan of Merger, dated as of March 14, 2012, by and among Shire Pharmaceuticals LLC, Pelegrina Corporation, FerroKin BioSciences, Inc. and Shareholder Representative Services LLC, solely for the limited purposes set forth therein. (6)

3.01	Form of Memorandum of Association of Shire plc as adopted by a special resolution passed on April 10, 2008 and amended by a special resolution passed on September 24, 2008. (7)

3.02	Form of Article of Association of Shire plc as amended by a special resolution passed on April 26, 2011 and adopted by a special resolution passed on April 26, 2011. (8)

4.01

Form of Assignment and Novation Agreement between Shire Limited, Shire plc, JPMorgan Chase Bank, N.A. dated April 16, 2008 relating to the Deposit Agreement among Shire plc, JPMorgan Chase Bank, N.A. as depositary and all holders from time to time of ADRs issued thereunder dated November 21, 2005.(9)

4.02	Form of Deposit Agreement among Shire plc, JPMorgan Chase Bank, N.A. as depositary and all holders from time to time of ADRs issued thereunder dated November 21, 2005. (10)

4.03	Form of Ordinary Share Certificate of Shire Limited. (11)

4.04	Form of American Depositary Receipt Certificate of Shire Limited. (12)

4.05	Trust Deed for the New Shire Income Access Trust, dated August 29, 2008. (13)

4.06	Form of Amended and Restated Deposit Agreement among Shire plc, Citibank, N.A. as successor depositary, and all holders from time to time of ADRs thereunder dated May 23, 2011 (14)

10.01

Tender and Support Agreement dated as of February 20, 2007 among Shire plc, Mr. Randal J. Kirk and the other parties named therein. (15)

10.02

Multicurrency Term and Revolving Facilities Agreement as of February 20, 2007 by and among Shire plc, ABN AMRO Bank N.V., Barclays Capital, Citigroup Global Markets Limited, The Royal Bank of Scotland plc, and Barclays Bank plc. (16)

10.03

Accession and Amendment Deed dated April 15, 2008 between Shire Limited, Shire plc, certain subsidiaries of Shire plc and Barclays Bank PLC as Facility Agent relating to a US $1,200,000,000 facility agreement dated February 20, 2007 (as amended by a syndication and amendment agreement dated July 19, 2007). (17)

10.04

Subscription Agreement dated May 2, 2007 relating to the 2.75% Convertible Bonds due 2014 between Shire plc and ABN AMRO Bank N.V. and NM Rothschild & Sons Limited (trading together as ABN AMRO Rothschild, an unincorporated equity capital markets joint venture) and Barclays Bank PLC and Citigroup Global Markets Limited and Goldman Sachs International and Morgan Stanley & Co. International plc and others. (18)

10.05

Amending Subscription Agreement dated May 8, 2007 relating to the 2.75% Convertible Bonds due 2014 between Shire plc and ABN AMRO Bank N.V. and NM Rothschild & Sons Limited (trading together as ABN AMRO Rothschild, an unincorporated equity capital markets joint venture) and Barclays Bank PLC and Citigroup Global Markets Limited and Goldman Sachs International and Morgan Stanley & Co. International plc and others. (19)

10.06

Trust Deed dated May 9, 2007 relating to the 2.75% Convertible Bonds due 2014 between Shire plc and BNY Corporate Trustee Services Limited. (20)

10.07

Supplemental Trust Deed dated April 15, 2008 between Shire Limited, Shire plc and BNY Corporate Trustee Services Limited relating to a trust deed dated May 9, 2007 relating to US $1,100,000,000 2.75% Convertible Bonds due 2014. (21)

10.08

Accession and Amendment Agreement dated April 15, 2008 between Shire Limited, Shire plc, BNY Corporate Trustee Services Limited and The Bank of New York relating to a paying and conversion agency agreement dated May 9, 2007 relating to US $1,100,000,000 2.75% Convertible Bonds due 2014. (22)

10.09*

Revised and Restated Master License Agreement dated November 20, 1995 among Shire BioChem Inc (f/k/a BioChem Pharma Inc.), Glaxo Group Limited, Glaxo Wellcome Inc. (formerly Glaxo Canada Inc.), Glaxo Wellcome Inc. (formerly Glaxo Inc.), Tanaud Holdings (Barbados) Limited, Tanaud International B.V. and Tanaud LLC. (23)

10.10*

Settlement Agreement, dated August 14, 2006 by and between Shire Laboratories Inc. and Barr. (24)

10.11*

Product Development and License Agreement, dated August 14, 2006 by and between Shire LLC and Duramed Pharmaceuticals, Inc. (25)

10.12*

Product Acquisition and License Agreement, dated August 14, 2006 by and among Shire LLC, Shire plc and Duramed Pharmaceuticals, Inc. (26)

10.13

Novation Agreement dated November 21, 2005 relating to the Employment Agreement of Angus Russell dated March 10, 2004. (27)

10.14

Novation Agreement dated April 11, 2008 relating to the Employment Agreement of Angus Russell dated March 10, 2004, as previously novated on November 21, 2005. (28)

10.15

Form of Amended and Restated Employment Agreement between Shire plc and Mr Matthew Emmens, dated March 12, 2004. (29)

10.16

Amendment Agreement dated November 21, 2005 relating to the Amended and Restated Employment Agreement of Matthew Emmens dated March 12, 2004. (30)

10.17

Ratification and Guaranty dated November 21, 2005 relating to the Amended and Restated Employment Agreement of Matthew Emmens dated March 12, 2004. (31)

10.18

Amendment Agreement dated May 20, 2008 relating to the Amended and Restated Employment Agreement of Matthew Emmens dated March 12, 2004, as amended on November 21, 2005. (32)

10.19

Ratification and Guaranty dated May 20, 2008 relating to the Amended and Restated Employment Agreement of Matthew Emmens dated March 12, 2004. (33)

10.20

Form of Indemnity Agreement for Directors of Shire Limited. (34)

10.21

Service Agreement between Shire Limited and Mr Graham Hetherington, dated July 2, 2008. (35)

10.22

Form of Settlement Agreement and Mutual Release in re: Transkaryotic Therapies, Inc., by and between Shire Human Genetic Therapies, Inc., Shire plc and the parties set forth therein. (36)

10.23

Amended Agreement dated February 24, 2009 relating to the Product Development and License Agreement dated August 14, 2006. (37)

10.24

Amendment to the Shire Portfolio Share Plan as approved by the Annual General meeting held on April 27, 2010. (38)

10.25

Multicurrency revolving and swingline facilities agreement as at November 23, 2010 by and among Shire plc & with a number of financial institutions, for which Abbey National Treasury Services Plc (trading as Santander Global Banking and Markets), Bank of America Securities Limited, Barclays Capital, Citigroup Global Markets Limited, Lloyds TSB Bank plc and The Royal Bank of Scotland plc acted as mandated lead arrangers and bookrunners and Credit Suisse AG, London Branch, Deutsche Bank AG, London Branch, Goldman Sachs International, Morgan Stanley Bank, N.A. and Sumitomo Mitsui Banking Corporation, Brussels Branch acted as arrangers. (39)

10.26

Service Agreement between Shire plc and Mr. Flemming Ornskov, dated October 24, 2012.

31.1	Certification of Angus Russell pursuant to Rule 13a - 14 under The Exchange Act.

31.2	Certification of Graham Hetherington pursuant to Rule 13a - 14 under The Exchange Act.

32.1	Certification of Angus Russell and Graham Hetherington pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

*	Certain portions of this exhibit have been omitted intentionally, subject to a confidential treatment request. A complete version of this agreement has been filed separately with the Securities and Exchange Commission.

(1)	Incorporated by reference to Exhibit 99.02 to Shire's Form 8-K filed on April 25, 2005.

(2)	Incorporated by reference to Exhibit 2.1 to Shire's Form 8-K filed on February 23, 2007.

(3)	Incorporated by reference to Exhibit 2.1 to Shire's Form 8-K filed on July 10, 2008.

(4)	Incorporated by reference to Exhibit 2.04 to Shire's Form 10-Q filed on November 5, 2010.

(5)	Incorporated by reference to Exhibit 2.1 to Shire's Form 8-K filed on June 30, 2011.

(6)	Incorporated by reference to Exhibit 2.06 to Shire's Form 10-Q filed on May 23, 2012.

(7)	Incorporated by reference to Exhibit 99.02 to Shire's Form 8-K filed on October 1, 2008.

(8)	Incorporated by reference to Exhibit 3.1 to Shire's Form 8-K filed on April 29, 2011.

(9)	Incorporated by reference to Exhibit 4.01 to Shire's Form 8-K filed on May 23, 2008.

(10)	Incorporated by reference to Exhibit 4.02 to Shire's Form 8-K filed on May 23, 2008.

(11)	Incorporated by reference to Exhibit 4.03 to Shire's Form 8-K filed on May 23, 2008.

(12)	Incorporated by reference to Exhibit 4.04 to Shire's Form 8-K filed on May 23, 2008.

(13)	Incorporated by reference to Exhibit 4.05 to Shire's Form 10-K filed on February 27, 2009.

(14)	Incorporated by reference to Exhibit (a) to Shire's Form F-6 filed on April 27, 2011.

(15)	Incorporated by reference to Exhibit 99.1 to Shire's Form 8-K filed on February 23, 2007.

(16)	Incorporated by reference to Exhibit 10.2 to Shire's Form 10-Q filed on May 1, 2007.

(17)	Incorporated by reference to Exhibit 10.01 to Shire's Form 8-K filed on May 23, 2008.

(18)	Incorporated by reference to Exhibit 10.1 to Shire's Form 10-Q filed on August 2, 2007.

(19)	Incorporated by reference to Exhibit 10.2 to Shire's Form 10-Q filed on August 2, 2007.

(20)	Incorporated by reference to Exhibit 10.3 to Shire's Form 10-Q filed on August 2, 2007.

(21)	Incorporated by reference to Exhibit 10.02 to Shire's Form 8-K filed on May 23, 2008.

(22)	Incorporated by reference to Exhibit 10.03 to Shire's Form 8-K filed on May 23, 2008.

(23)	Incorporated by reference to Exhibit 10.09 to Shire's Form 10-K/A filed on May 30, 2008.

(24)	Incorporated by reference to Exhibit 10.1 to Shire's Form 10-Q filed on November 7, 2006.

(25)	Incorporated by reference to Exhibit 10.2 to Shire's Form 10-Q filed on November 7, 2006.

(26)	Incorporated by reference to Exhibit 10.3 to Shire's Form 10-Q filed on November 7, 2006.

(27)	Incorporated by reference to Exhibit 10.03 to Shire's Form 8-K filed on November 25, 2005.

(28)	Incorporated by reference to Exhibit 10.06 to Shire's Form 8-K filed on May 23, 2008.

(29)	Incorporated by reference to Exhibit 10.13 to Shire's Form 10-K filed on March 12, 2004.

(30)	Incorporated by reference to Exhibit 10.01 to Shire's Form 8-K filed on November 25, 2005.

(31)	Incorporated by reference to Exhibit 10.02 to Shire's Form 8-K filed on November 25, 2005.

(32)	Incorporated by reference to Exhibit 10.04 to Shire's Form 8-K filed on May 23, 2008.

(33)	Incorporated by reference to Exhibit 10.05 to Shire's Form 8-K filed on May 23, 2008.

(34)	Incorporated by reference to Exhibit 10.07 to Shire's Form 8-K filed on May 23, 2008.

(35)	Incorporated by reference to Exhibit 10.23 to Shire's Form 10-Q filed on November 10, 2008.

(36)	Incorporated by reference to Exhibit 10.24 to Shire's Form 10-Q filed on November 10, 2008.

(37)	Incorporated by reference to Exhibit 10.25 to Shire's Form 10-Q filed on May 7, 2009.

(38)	Incorporated by reference to Exhibit 10.27 to Shire's Form 10-Q filed on May 6, 2010.

(39)	Incorporated by reference to Exhibit 10.28 to Shire's Form 10-K filed on February 23, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 7, 2013	/s/ Flemming Ornskov Flemming Ornskov Chief Executive Officer


Date: May 7, 2013	/s/ Graham Hetherington Graham Hetherington Chief Financial Officer